\nSection 8.11 Enforcement…………………………………………………….. 35
\n<\/c><\/s><\/caption>\n<\/table>\nExhibit A: Shareholders Agreement<\/p>\n
Schedules to this Agreement and Plan of Merger are omitted. Such
\nschedules identify matters related to representations and warranties by the
\nCompany regarding required third party consents, investment banking
\narrangements, legal proceedings, employee matters, environmental matters, tax
\nreturns, and intellectual property.<\/p>\n
-iii-<\/p>\n
AGREEMENT AND PLAN OF MERGER
\n —————————-<\/p>\n
AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of June 19,
\n2000, by and among Berkshire Hathaway Inc., a Delaware corporation (“Parent”), J
\nAcquisition Corp., a Texas corporation and a wholly owned subsidiary of Parent
\n(the “Purchaser”), and Justin Industries, Inc., a Texas corporation (the
\n“Company”).<\/p>\n
WHEREAS, the Board of Directors of Parent, the Board of Directors of
\nPurchaser, and the Board of Directors of the Company have approved, and
\ndetermined that it is in the best interests of their respective companies and
\nstockholders to consummate, the transactions provided for herein; and<\/p>\n
WHEREAS, Parent and Purchaser have proposed acquiring all of the
\noutstanding shares of Common Stock, par value $2.50 per share, of the Company
\n(the “Shares” or the “Company Common Stock”) together with the associated rights
\nto purchase Company Common Stock (the “Rights”) issued pursuant to the Rights
\nAgreement dated as of October 6, 1989, as amended (the “Rights Agreement”)
\nbetween the Company and The Bank of New York, as Rights Agent thereunder, at a
\nprice of $22.00 per Share in cash; and<\/p>\n
WHEREAS, the Company, Parent and Purchaser desire to make certain
\nrepresentations, warranties, covenants and agreements in connection with the
\nOffer (as defined herein) and the Merger (as defined herein); and<\/p>\n
WHEREAS, concurrently with the execution and delivery of this
\nAgreement and as a condition to Parent’s and Purchaser’s willingness to enter
\ninto this Agreement, Parent and Purchaser have entered into a Stockholder
\nAgreement, dated as of the date hereof, the form of which is attached as Exhibit
\nA hereto (the “Stockholder Agreement”), with the stockholder named therein (the
\n“Stockholder”), pursuant to which the Stockholder has, among other things, (1)
\nagreed to tender all Shares (including Shares to be acquired upon conversion of
\nthe Series Two Convertible Voting Preferred Stock, par value $2.50 per share, of
\nthe Company (the “Company Preferred Stock” and collectively with the Company
\nCommon Stock, the “Company Stock”) owned by the Stockholder pursuant to the
\nOffer, (2) granted to Parent an option to purchase all of the Shares owned by
\nthe Stockholder, and (3) agreed to vote all Shares beneficially owned by the
\nStockholder in favor of the Merger and this Agreement and against any Takeover
\nProposal (as defined herein), in each case subject to and on the conditions set
\nforth therein.<\/p>\n
NOW, THEREFORE, in consideration of the foregoing and the respective
\nrepresentations, warranties, covenants and agreements set forth herein, the
\nparties hereto agree as follows:<\/p>\n
ARTICLE I<\/p>\n
THE OFFER AND MERGER<\/p>\n
Section 1.1 The Offer.
\n ———
\n (a) Provided this Agreement shall not have been terminated in
\naccordance with Section 7.1, as promptly as practicable (but in no event later
\nthan seven (7) business days after the public announcement of the execution
\nhereof), the Purchaser shall, and Parent shall cause Purchaser to, commence
\n(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
\namended (the “Exchange Act”) ) an offer (the “Offer”) to purchase for cash all
\nof the Shares (and associated Rights) at a price of $22.00 per Share, net to the
\nseller in cash (such price, or such higher price per Share as may be paid in the
\nOffer, being referred to herein as the “Offer Price”), subject only to the
\nconditions set forth in Annex A hereto; provided, however, that Parent may
\n ——– ——-
\ndesignate another wholly owned, direct or indirect subsidiary of Parent as the
\nbidder (within the meaning of Rule 14d-1(g) under the Exchange Act) in the
\nOffer, in which case reference herein to Purchaser shall be deemed to apply to
\nsuch subsidiary, as appropriate. The Company shall not tender Shares held by it
\nor by any of its subsidiaries pursuant to the Offer. The Purchaser shall, and
\nParent shall cause the Purchaser to, on the terms and subject to the prior
\nsatisfaction or waiver of the conditions to the Offer, accept for payment and
\npay for Shares tendered as soon as it is legally permitted to do so under
\napplicable law.<\/p>\n
(b) The Offer shall be made by means of an offer to purchase
\n(the “Offer to Purchase”) containing the terms set forth in this Agreement and
\nonly the conditions set forth in Annex A hereto and providing for an initial
\nexpiration date (the “Expiration Date”) of twenty (20) business days (as defined
\nin Rule 14d-1 under the Exchange Act) from the date of commencement. The
\nPurchaser shall not, and Parent shall cause the Purchaser not to, decrease the
\nOffer Price or decrease the number of Shares sought, amend the conditions to the
\nOffer set forth in Annex A or impose conditions to the Offer in addition to
\nthose set forth in Annex A, without the prior written consent of the Company.
\nThe Purchaser may, without the consent of the Company, (A) extend the Offer for
\nthe shortest time periods which it reasonably believes are necessary, but in no
\nevent more than an additional forty (40) days, in one or more periods of not
\nmore than ten (10) business days, if Parent and Purchaser are not in material
\nbreach of this Agreement and if any condition to the Offer is not satisfied or
\nwaived and such condition is reasonably capable of being satisfied and (B) if,
\non the Expiration Date, the Shares validly tendered and not withdrawn pursuant
\nto the Offer equal at least seventy-five percent (75%) of the outstanding Shares
\nbut less than ninety percent (90%) of the outstanding Shares (on a fully diluted
\nbasis, as such term is defined in Annex A), extend the Offer on one occasion for
\nup to ten (10) business days notwithstanding that all the conditions to the
\nOffer have been satisfied so long as Purchaser irrevocably waives the
\nsatisfaction of any of the conditions to the Offer (other than in the case of
\nparagraph (a) of Annex A hereto the occurrence of any statute, rule, regulation,
\njudgment, order or preliminary or permanent injunction making illegal or
\nprohibiting the consummation of the Offer) that subsequently may not be
\nsatisfied during any such extension of the Offer. In addition, the Offer Price
\nmay be increased and the Offer may be extended to the extent required by law in
\nconnection with such increase, in each case without the consent of the Company.<\/p>\n
2<\/p>\n
(c) On the date the Offer is commenced, Parent and Purchaser
\nshall file with the United States Securities and Exchange Commission (the “SEC”)
\na Tender Offer Statement on Schedule TO with respect to the Offer (together with
\nall amendments and supplements thereto and including the exhibits thereto, the
\n“Schedule TO”). The Schedule TO shall contain or shall incorporate by reference
\nthe Offer to Purchase and a form of letter of transmittal and summary
\nadvertisement (the Schedule TO, the Offer to Purchase and related letter of
\ntransmittal and related summary advertisement, together with any amendments and
\nsupplements thereto, collectively the “Offer Documents”). The Offer Documents
\nshall comply in all material respects with the provisions of applicable federal
\nsecurities laws and, on the date filed with the SEC and on the date first
\npublished, sent or given to the Company’s stockholders, shall not contain any
\nuntrue statement of a material fact or omit to state any material fact required
\nto be stated therein or necessary in order to make the statements therein, in
\nlight of the circumstances under which they were made, not misleading, except
\nthat no representation is made by Parent or the Purchaser with respect to
\ninformation supplied by the Company for inclusion in the Offer Documents. Each
\nof Parent and Purchaser shall further take all steps necessary to cause the
\nOffer Documents to be filed with the SEC and to be disseminated to holders of
\nShares, in each case as and to the extent required by applicable federal
\nsecurities laws. Each of Parent and Purchaser, on the one hand, and the Company,
\non the other hand, shall promptly correct any information provided by it for use
\nin the Offer Documents if and to the extent that it shall have become false and
\nmisleading in any material respect and the Purchaser further shall take all
\nsteps necessary to cause the Offer Documents as so corrected to be filed with
\nthe SEC and to be disseminated to holders of Shares, in each case as and to the
\nextent required by applicable federal securities laws. The Company and its
\ncounsel shall be given an opportunity to review and comment upon the Schedule TO
\n(and shall provide any comments thereon as soon as practicable) prior to the
\nfiling thereof with the SEC. In addition, Parent shall, and shall cause the
\nPurchaser to, provide the Company and its counsel in writing with any comments
\nthat Parent, Purchaser or their counsel may receive from the SEC or its staff
\nwith respect to the Offer Documents promptly after receipt of such comments and
\nwith copies of any written responses and telephonic notification of any verbal
\nresponses by Parent, Purchaser or their counsel.<\/p>\n
(d) Parent shall provide or cause to be provided to Purchaser
\nall of the funds necessary to purchase any Shares that Purchaser becomes
\nobligated to purchase pursuant to the Offer.<\/p>\n
Section 1.2 Company Actions.
\n —————
\n (a) The Company hereby approves of and consents to the Offer
\nand represents that its Board of Directors, at a meeting duly called and held,
\nhas (i) approved this Agreement (including all terms and conditions set forth
\nherein) and the transactions contemplated hereby, including the Offer and the
\nMerger (as defined in Section 1.4) (collectively, the “Transactions”),
\ndetermined that the Merger is advisable and that the terms of the Offer and the
\nMerger are fair to, and in the best interests of, the Company’s stockholders and
\nrecommended that the Company’s stockholders accept the Offer, tender their
\nShares thereunder to the Purchaser and approve and adopt this Agreement and the
\nMerger; provided, that such recommendation may be withdrawn, modified or amended
\n ——–
\nas provided in Section 5.2(b). The<\/p>\n
3<\/p>\n
Company hereby consents to the inclusion in the Offer Documents of the
\nrecommendation of its Board of Directors described in the immediately preceding
\nsentence.<\/p>\n
(b) Concurrently with the commencement of the Offer or as
\npromptly thereafter as practicable, the Company shall file with the SEC a
\nSolicitation\/Recommendation Statement on Schedule 14D-9 (together with all
\namendments and supplements thereto and including the exhibits thereto, the
\n“Schedule 14D-9”) which shall contain the recommendation referred to in Section
\n1.2 (a) hereof unless such recommendation has been withdrawn, or as such
\nrecommendation has been modified or amended, in each case in accordance with the
\nprovisions of this Agreement. The Schedule 14D-9 shall comply in all material
\nrespects with the provisions of applicable federal securities laws and, on the
\ndate filed with the SEC and on the date first published, sent or given to the
\nCompany’s stockholders, shall not contain any untrue statement of a material
\nfact or omit to state any material fact required to be stated therein or
\nnecessary in order to make the statements therein, in light of the circumstances
\nunder which they were made, not misleading, except that no representation is
\nmade by the Company with respect to information supplied by Parent or the
\nPurchaser for inclusion in the Schedule 14D-9. The Company further shall take
\nall steps necessary to cause the Schedule 14D-9 to be filed with the SEC and to
\nbe disseminated to holders of Shares, in each case as and to the extent required
\nby applicable federal securities laws, and shall mail such Schedule 14D-9 to the
\nstockholders of the Company promptly after commencement of the Offer, together
\nwith the initial mailing of the Offer to Purchase. Each of the Company, on the
\none hand, and Parent and Purchaser, on the other hand, shall promptly correct
\nany information provided by it for use in the Schedule 14D-9 if and to the
\nextent that it shall have become false and misleading in any material respect
\nand the Company further shall take all steps necessary to cause the Schedule
\n14D-9 as so corrected to be filed with the SEC and to be disseminated to holders
\nof the Shares, in each case as and to the extent required by applicable federal
\nsecurities laws. Parent, the Purchaser and their counsel shall be given an
\nopportunity to review and comment upon the Schedule 14D-9 (and shall provide any
\ncomments thereon as soon as practicable) prior to the filing thereof with the
\nSEC. In addition, the Company shall provide Parent, the Purchaser and their
\ncounsel in writing with any comments the Company or its counsel may receive from
\nthe SEC or its staff with respect to the Schedule 14D-9 promptly after receipt
\nof such comments and with copies of any written responses and telephonic
\nnotification of any verbal responses by the Company or its counsel.<\/p>\n
(c) In connection with the Offer, the Company shall promptly
\nfurnish or cause to be furnished to the Purchaser mailing labels, security
\nposition listings and any available listing or computer file containing the
\nnames and addresses of the record holders of the Shares as of a recent date, and
\nshall promptly furnish Parent with such additional information, including
\nupdated lists of stockholders, mailing labels and security position listings,
\nand such other information and assistance as the Purchaser or its agents may
\nreasonably request in communicating the Offer to the stockholders of the
\nCompany. Except for such steps as are necessary to disseminate the Offer
\nDocuments and subject to the requirements of applicable law, Parent shall, and
\nshall cause the Purchaser and each of their affiliates, associates, employees,
\nagents and advisors to, hold in confidence the information contained in any of
\nsuch labels and lists and the additional information referred to in the
\npreceding sentence, shall use such information only in connection with the Offer
\nand Merger, and, if this Agreement is terminated, shall promptly deliver or
\ncause to be delivered to the Company all copies of such information then in its
\npossession or control or the possession or control of its agents or
\nrepresentatives.<\/p>\n
4<\/p>\n
Section 1.3 Directors. Promptly upon the purchase by Purchaser of
\n ———
\nShares pursuant to the Offer, and from time to time thereafter as Shares are
\nacquired by Purchaser, Parent or their affiliates, Purchaser shall be entitled
\nto designate such number of directors, rounded up to the next whole number, on
\nthe Board of Directors of the Company as will give Purchaser, subject to
\ncompliance with Section 14(f) of the Exchange Act, representation on the Board
\nof Directors of the Company equal to that number of directors which equals the
\nproduct of the total number of directors on the Board of Directors of the
\nCompany (giving effect to the directors appointed or elected pursuant to this
\nsentence and including current directors serving as officers of the Company)
\nmultiplied by the percentage that the aggregate number of Shares beneficially
\nowned by Parent, Purchaser or any of their affiliates (including for purposes of
\nthis Section 1.3 such Shares as are accepted for payment pursuant to the Offer,
\nbut excluding Shares held by the Company or any of its subsidiaries) bears to
\nthe total number of shares of Company Common Stock then issued and outstanding.
\nAt such times, if requested by Purchaser, the Company will use its best efforts
\nto cause each committee of the Board of Directors of the Company and the Board
\nof Directors of each subsidiary of the Company to include persons designated by
\nPurchaser constituting the same percentage of each such committee and the Board
\nof Directors of each subsidiary of the Company as Purchaser’s designees are of
\nthe Board of Directors of the Company. The Company shall, upon request by
\nPurchaser, promptly increase the size of the Board of Directors of the Company
\nas is necessary to enable Purchaser’s designees to be elected to the Board of
\nDirectors of the Company in accordance with the terms of this Section 1.3 and
\nshall cause Purchaser’s designees to be so elected; provided, however, that, if
\n ——– ——-
\nPurchaser’s designees are appointed or elected to the Board of Directors of the
\nCompany, until the Effective Time (as hereinafter defined) the Board of
\nDirectors of the Company shall have at least two (2) directors who are directors
\non the date hereof and who are neither officers of the Company nor designees,
\nstockholders, affiliates or associates (within the meaning of the federal
\nsecurities laws) of Parent (one or more of such directors, the “Independent
\nDirectors”); provided further, that if less than two (2) Independent Directors
\nremain, the remaining Independent Director (if any) or if no Independent
\nDirectors remain, the other directors, shall designate persons to fill the
\nvacancies who shall not be either officers of the Company or designees,
\nshareholders, affiliates or associates of Parent, and such persons shall be
\ndeemed to be Independent Directors for purposes of this Agreement. Subject to
\napplicable law, the Company shall promptly take all action necessary pursuant to
\nSection 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
\nto fulfill its obligations under this Section 1.3 and shall include in the
\nSchedule 14D-9 mailed to stockholders promptly after the commencement of the
\nOffer (or an amendment thereof or an information statement pursuant to Rule 14f-
\n1 if Purchaser has not theretofore designated directors) such information with
\nrespect to the Company and its officers and directors as is required under
\nSection 14(f) and Rule 14f-1 in order to fulfill its obligations under this
\nSection 1.3. Parent and Purchaser will supply the Company and be solely
\nresponsible for any information with respect to itself and its nominees,
\nofficers, directors and affiliates required by Section 14(f) and Rule 14f-1.
\nNotwithstanding anything in this Agreement to the contrary, during the period
\nafter the election of directors designated by Purchaser pursuant to this Section
\n1.3 but prior to the Effective Time, the Board of Directors of the Company shall
\ndelegate to a committee of the Board of Directors of the Company comprised
\nsolely of the Independent Directors (the “Committee”) the sole responsibility
\nfor (i) the amendment or termination of this Agreement (in either case in
\naccordance with this Agreement) on behalf of the Company, but excluding a
\ntermination pursuant to Section 7.1(c)(ii) hereof, which is not <\/p>\n
5<\/p>\n
delegated, (ii) the waiver of any of the Company’s rights or remedies hereunder,
\n(iii) the extension of the time for performance of Parent’s or Purchaser’s
\nobligations hereunder, or (iv) the assertion or enforcement of the Company’s
\nrights under this Agreement to object to (a) a failure to consummate the Merger
\nfor a failure of the condition set forth in Section 6.2 to be satisfied or (b) a
\ntermination of this Agreement under Section 7.1(d)(iii).<\/p>\n
Section 1.4 The Merger. Subject to the terms and conditions of this
\n ———-
\nAgreement and the provisions of the Texas Business Corporation Act (the “Texas
\nAct”), at the Effective Time, the Company and the Purchaser shall consummate a
\nmerger (the “Merger”) pursuant to which (a) the Purchaser shall be merged with
\nand into the Company and the separate corporate existence of the Purchaser shall
\nthereupon cease, (b) the Company shall be the successor or surviving corporation
\nin the Merger (the “Surviving Corporation”) under the name “Justin Industries,
\nInc.” and shall continue to be governed by the laws of the State of Texas, and
\n(c) the separate corporate existence of the Company with all its rights,
\nprivileges, immunities, powers and franchises shall continue unaffected by the
\nMerger. At the Effective Time, (x) the articles of incorporation of the Company
\nshall be amended as desired by Parent and as so amended shall become the
\narticles of incorporation of the Surviving Corporation, until thereafter amended
\nas provided by law and such articles of incorporation, (y) the bylaws of the
\nPurchaser, as in effect immediately prior to the Effective Time, shall be the
\nbylaws of the Surviving Corporation until thereafter amended as provided by law,
\nthe articles of incorporation and such bylaws. The Merger shall have the effects
\nset forth in the Texas Act.<\/p>\n
Section 1.5 Effective Time. Parent, Purchaser, and the Company shall
\n ————–
\ncause appropriate Articles of Merger (the “Articles of Merger”) to be executed
\nand filed on the date of the Closing (as defined in Section 1.6) (or on such
\nother date as Parent and the Company may agree) with the Secretary of State of
\nthe State of Texas (the “Secretary of State”) as provided in the Texas Act. The
\nMerger shall become effective on the date on which the Articles of Merger have
\nbeen duly filed with the Secretary of State or such later time as is agreed upon
\nby the parties and specified in the Articles of Merger, and such time is
\nhereinafter referred to as the “Effective Time.”<\/p>\n
Section 1.6 Closing. The closing of the Merger (the “Closing”) shall
\n ——-
\ntake place at 10:00 a.m., on a date to be specified by the parties, which shall
\nbe as soon as practicable, but in no event later than the second business day,
\nafter satisfaction or waiver of all of the conditions set forth in Article VI
\nhereof (the “Closing Date”), at the offices of Munger, Tolles & Olson, 355 South
\nGrand Avenue, Los Angeles, California, unless another date or place is agreed to
\nin writing by the parties hereto.<\/p>\n
Section 1.7 Directors and Officers of the Surviving Corporation. The
\n —————————————————
\ndirectors of the Purchaser and the officers of the Company immediately prior to
\nthe Effective Time shall, from and after the Effective Time, be the directors
\nand officers, respectively, of the Surviving Corporation until their successors
\nshall have been duly elected or appointed or qualified or until their earlier
\ndeath, resignation or removal in accordance with the Surviving Corporation’s
\narticles of incorporation and bylaws.<\/p>\n
Section 1.8 Stockholders’ Meeting.
\n ——————— <\/p>\n
6<\/p>\n
(a) If required by applicable law in order to consummate the
\nMerger, the Company, acting through its Board of Directors, shall, in accordance
\nwith applicable law:<\/p>\n
(i) duly call, give notice of, convene and hold a
\nspecial meeting of its stockholders for the purpose of considering and taking
\naction upon this Agreement (the “Special Meeting”) as soon as practicable
\nfollowing the acceptance for payment and purchase of Shares by the Purchaser
\npursuant to the Offer;<\/p>\n
(ii) prepare and file with the SEC a preliminary proxy or
\ninformation statement relating to the Merger and this Agreement and use its
\nreasonable efforts (x) to obtain and furnish the information required to be
\nincluded by the federal securities laws (and the rules and regulations
\nthereunder) in the Proxy Statement (as hereinafter defined) and, after
\nconsultation with Parent, to respond promptly to any comments made by the SEC
\nwith respect to the preliminary proxy or information statement and cause a
\ndefinitive proxy or information statement (the “Proxy Statement”) to be mailed
\nto its stockholders and (y) to obtain the necessary approvals of the Merger and
\nthis Agreement by its stockholders; and<\/p>\n
(iii) include in the Proxy Statement the recommendation of
\nthe Board that stockholders of the Company vote in favor of the approval of the
\nMerger and the adoption of this Agreement, unless such recommendation has been
\nwithdrawn, or as such recommendation has been modified or amended, in each case
\nin accordance with the provisions of this Agreement.<\/p>\n
(b) Parent shall provide the Company with the information
\nconcerning Parent and Purchaser required to be included in the Proxy Statement.
\nParent shall vote, or cause to be voted, all of the Shares then owned by it, the
\nPurchaser or any of its other subsidiaries and affiliates in favor of the
\napproval of the Merger and the adoption of this Agreement.<\/p>\n
Section 1.9 Merger Without Meeting of Stockholders. In the event
\n ————————————–
\nthat Parent, the Purchaser or any other Subsidiary of Parent, shall acquire at
\nleast ninety percent (90%) of the then-outstanding shares of Company Common
\nStock, pursuant to the Offer or otherwise, each of the parties hereto shall take
\nall necessary and appropriate action to cause the Merger to become effective as
\nsoon as practicable after such acquisition, without a meeting of stockholders of
\nthe Company, in accordance with Article 5.16 (in lieu of Article 5.03) of the
\nTexas Act.<\/p>\n
ARTICLE II<\/p>\n
CONVERSION OF SECURITIES<\/p>\n
Section 2.1 Conversion of Capital Stock. As of the Effective Time,
\n —————————
\nby virtue of the Merger and without any action on the part of the holders of any
\nshares of Company Common Stock or of the common stock, par value $.0l per share,
\nof the Purchaser (the “Purchaser Common Stock”):<\/p>\n
(a) Purchaser Common Stock. Each issued and outstanding share
\n ———————-
\nof the Purchaser Common Stock shall be converted into and become one validly
\nissued, fully paid and nonassessable share of common stock, par value $.0l per
\nshare, of the Surviving Corporation.<\/p>\n
7<\/p>\n
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
\n —————————————————–
\nAll shares of Company Common Stock that are owned by the Company as treasury
\nstock, all shares of Company Common Stock owned by any subsidiary of the Company
\nand any shares of Company Common Stock owned by Parent, the Purchaser or any
\nother wholly owned subsidiary of Parent (in each case together with associated
\nRights) shall be canceled and retired and shall cease to exist and no
\nconsideration shall be delivered in exchange therefor.<\/p>\n
(c) Conversion of Shares. Each issued and outstanding share
\n ——————–
\nof Company Common Stock (together with associated Rights), other than Shares to
\nbe canceled in accordance with Section 2.1(b) hereof and any Dissenting Shares
\n(as defined in Section 2.3 hereof), shall be converted into the right to receive
\nthe Offer Price in cash, without interest (the “Merger Consideration”), payable
\nto the holder thereof upon surrender of the certificate formerly representing
\nsuch share of Company Common Stock (and associated Rights) in the manner
\nprovided in Section 2.2 hereof. All such shares of Company Common Stock (and
\nassociated Rights), when so converted, shall no longer be outstanding and shall
\nautomatically be canceled and retired and shall cease to exist, and each holder
\nof a certificate representing any such Shares (and associated Rights) shall
\ncease to have any rights with respect thereto, except the right to receive the
\nMerger Consideration therefor upon the surrender of such certificate in
\naccordance with Section 2.2 hereof, without interest.<\/p>\n
Section 2.2 Exchange of Certificates.
\n ———————— <\/p>\n
(a) Paying Agent. Parent shall designate a bank or trust
\n ————
\ncompany (the “Paying Agent”) reasonably acceptable to the Company to make the
\npayments of the funds to which holders of shares of Company Common Stock shall
\nbecome entitled pursuant to Section 2.1(c) hereof. When and as needed, Parent
\nshall make available to the Paying Agent such funds for timely payment
\nhereunder. Such funds shall be invested by the Paying Agent as directed by
\nParent or the Surviving Corporation. Any net profit resulting from, or interest
\nor income produced by, such investments will be payable to Parent.<\/p>\n
(b) Exchange Procedures. Promptly after the Effective Time
\n ——————-
\nbut in no event more than three (3) business days thereafter, Parent shall cause
\nthe Paying Agent to mail to each holder of record of a certificate or
\ncertificates, which immediately prior to the Effective Time represented
\noutstanding shares of Company Common Stock (the “Certificates”), whose shares
\nwere converted pursuant to Section 2.1(c) into the right to receive the Merger
\nConsideration, (i) a letter of transmittal (which shall specify that delivery
\nshall be effected, and risk of loss and title to the Certificates shall pass,
\nonly upon delivery of the Certificates to the Paying Agent and shall be in such
\nform and have such other provisions as Parent and the Surviving Corporation may
\nreasonably specify) and (ii) instructions for use in effecting the surrender of
\nthe Certificates in exchange for payment of the Merger Consideration. Upon
\nsurrender of a Certificate for cancellation to the Paying Agent, together with
\nsuch letter of transmittal, duly executed, the holder of such Certificate shall
\nbe entitled to receive in exchange therefor the Merger Consideration (subject to
\nsubsection (e), below) for each share of Company Common Stock formerly
\nrepresented by such Certificate and the Certificate so surrendered shall
\nforthwith be canceled. If payment of the Merger Consideration is to be made to a
\nperson other than the person in whose name the surrendered Certificate is
\nregistered, it shall be a condition of payment that the Certificate so
\nsurrendered shall be properly endorsed or shall be otherwise in <\/p>\n
8<\/p>\n
proper form for transfer and that the person requesting such payment shall have
\npaid any transfer and other taxes required by reason of the payment of the
\nMerger Consideration to a person other than the registered holder of the
\nCertificate surrendered or shall have established to the satisfaction of the
\nSurviving Corporation that such tax either has been paid or is not applicable.
\nUntil surrendered as contemplated by this Section 2.2, each Certificate shall be
\ndeemed at any time after the Effective Time to represent only the right to
\nreceive the Merger Consideration in cash as contemplated by this Section 2.2.<\/p>\n
(c) Transfer Books; No Further Ownership Rights in Company
\n ——————————————————
\nCommon Stock. At the Effective Time, the stock transfer books of the Company
\n————
\nshall be closed and thereafter there shall be no further registration of
\ntransfers of shares of Company Common Stock on the records of the Company. From
\nand after the Effective Time, the holders of Certificates evidencing ownership
\nof shares of Company Common Stock outstanding immediately prior to the Effective
\nTime shall cease to have any rights with respect to such Shares, except as
\notherwise provided for herein or by applicable law. If, after the Effective
\nTime, Certificates are presented to the Surviving Corporation for any reason,
\nthey shall be canceled and exchanged as provided in this Article II.<\/p>\n
(d) Termination of Fund; No Liability. At any time following
\n ———————————
\n180 calendar days after the Effective Time, the Surviving Corporation shall be
\nentitled to require the Paying Agent to deliver to it any funds (including any
\ninterest received with respect thereto) which had been made available to the
\nPaying Agent and which have not been disbursed to holders of Certificates, and
\nthereafter such holders shall be entitled to look only to the Surviving
\nCorporation (subject to abandoned property, escheat or other similar laws) as
\ngeneral creditors thereof with respect to the payment of any Merger
\nConsideration that may be payable upon surrender of any Certificates such
\nstockholder holds, as determined pursuant to this Agreement, without any
\ninterest thereon. Notwithstanding the foregoing, neither the Surviving
\nCorporation nor the Paying Agent shall be liable to any holder of a Certificate
\nfor Merger Consideration delivered to a public official pursuant to any
\napplicable abandoned property, escheat or similar law.<\/p>\n
(e) Withholding Taxes. If so specified in the Offer
\n —————–
\nDocuments, Parent, the Purchaser, the Surviving Corporation and the Paying Agent
\nshall be entitled to deduct and withhold from the consideration otherwise
\npayable to a holder of Shares pursuant to the Offer or Merger such amounts as
\nParent, the Purchaser, the Surviving Corporation or the Paying Agent is required
\nto deduct and withhold with respect to the making of such payment under the
\nInternal Revenue Code of 1986, as amended (the “Code”) or any provision of
\nstate, local or foreign tax law. To the extent amounts are so withheld by
\nParent, the Purchaser, the Surviving Corporation or the Paying Agent, the
\nwithheld amounts shall be treated for all purposes of this Agreement as having
\nbeen paid to the holder of the Shares in respect of which the deduction and
\nwithholding was made.<\/p>\n
Section 2.3 Dissenting Shares. Notwithstanding any provision of this
\n —————–
\nAgreement to the contrary, if and to the extent required by the Texas Act,
\nshares of Company Common Stock which are issued and outstanding immediately
\nprior to the Effective Time and which are held by holders of such shares of
\nCompany Common Stock who have properly exercised appraisal rights with respect
\nthereto (the “Dissenting Common Stock”) in accordance <\/p>\n
9<\/p>\n
with Articles 5.11, 5.12 and 5.13 of the Texas Act, shall not be exchangeable
\nfor the right to receive the Merger Consideration, and holders of such shares of
\nDissenting Common Stock shall be entitled to receive payment of the appraised
\nvalue of such shares of Dissenting Common Stock in accordance with the
\nprovisions of Article 12 of the Texas Act unless and until such holders fail to
\nperfect or effectively withdraw or otherwise lose their rights to appraisal and
\npayment under the Texas Act. If, after the Effective Time, any such holder fails
\nto perfect or effectively withdraws or loses such right, such shares of
\nDissenting Common Stock shall thereupon be treated as if they had been converted
\ninto and to have become exchangeable for, at the Effective Time, the right to
\nreceive the Merger Consideration, without any interest thereon. Notwithstanding
\nanything to the contrary contained in this Section 2.3, if the Merger is
\nrescinded or abandoned, then the right of any stockholder to be paid the fair
\nvalue of such stockholder’s Dissenting Common Stock pursuant to Article 12 of
\nthe Texas Act shall cease. The Company shall give Parent prompt notice of any
\ndemands received by the Company for appraisals of shares of Dissenting Common
\nStock. The Company shall not, except with the prior written consent of Parent,
\nmake any payment with respect to any demands for appraisals or offer to settle
\nor settle any such demands.<\/p>\n
Section 2.4 Company Option Plans. Prior to the Closing Date, the
\n ——————–
\nBoard of Directors of Parent and the Board of Directors of the Company (or, if
\nappropriate, any committee administering the Option Plans (as defined below))
\nshall adopt such resolutions or take such other actions as may be required to
\neffect the following:<\/p>\n
(a) Adjust the terms of all outstanding stock options to
\npurchase shares of Company Common Stock (“Company Stock Options”) granted under
\nthe Company’s 1981 Stock Option Plan, 1984 Incentive Stock Option Plan, 1992
\nStock Option Plan, 1996 Non-Employee Director Stock Option Plan or 1999
\nPerformance Incentive Plan, each as amended (the “Option Plans”), to provide
\nthat each Company Stock Option outstanding immediately prior to the Effective
\nTime shall (except to the extent that Parent and the holder of a Company Stock
\nOption otherwise agree in writing prior to the Effective Time): (i) vest
\nimmediately prior to the Effective Time; (ii) if such Company Stock Option has
\nan exercise price of less than the Offer Price, unless the holder of such
\nCompany Stock Option shall have elected by written notice to Parent prior to the
\ndate 15 business days prior to the Effective Time to receive the consideration
\ncontemplated by clause (iii), be cancelled at the Effective Time in exchange for
\na payment from the Surviving Corporation (subject to any applicable withholding
\ntaxes) equal to the product of (1) the total number of shares of Company Common
\nStock subject to such Company Stock Option and (2) the excess of the Offer Price
\nover the exercise price per share of Company Common Stock subject to such
\nCompany Stock Option, payable in cash immediately following the Effective Time;
\nor (iii) with respect to any Company Stock Option not cancelled pursuant to
\nclause (ii) above, at the Effective Time, be assumed by Parent, or substituted
\nwith a new option issued by Parent, so that such Company Stock Option shall be
\ndeemed to constitute an option to acquire, on the terms and conditions of
\nParent’s 1996 Stock Option Plan, as amended, (x) the number of shares of Parent
\nClass B common stock, par value $.1667 per share (“Parent Class B Stock”) (which
\nshares shall be registered pursuant to an effective registration statement)
\nequal to the product of (1) the number of shares of Company Common Stock
\nissuable upon exercise of such Company Stock Option and (2) 0.0113519 (the
\n“Parent Class B Exchange Ratio”), provided that any fractional shares of Parent
\nClass B Stock resulting from such multiplication shall be rounded up or down to
\nthe nearest whole share, at (y) a price per share equal to (1) the exercise<\/p>\n
10<\/p>\n
price for the shares of Company Common Stock otherwise purchasable pursuant to
\nsuch Company Stock Option divided by (2) the Parent Class B Exchange Ratio,
\nprovided that such exercise price shall be rounded up or down to the nearest
\ncent.<\/p>\n
(b) Except as provided in subsection (a) above, the Option
\nPlans and any other plan, program or arrangement providing for the issuance or
\ngrant of any interest in respect of the capital stock of the Company or any
\nsubsidiary shall terminate as of the Effective Time, and the Company shall
\nensure that following the Effective Time no holder of a Company Stock Option nor
\nany participant in any such plan, program or arrangement shall have any right
\nthereunder to acquire capital securities of Parent or the Surviving Corporation.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES OF THE COMPANY<\/p>\n
The Company represents and warrants to Parent and Purchaser as
\nfollows:<\/p>\n
Section 3.1 Corporate Organization. Each of the Company and its
\n ———————-
\nsubsidiaries is a corporation duly organized, validly existing and in good
\nstanding under the laws of the jurisdiction of its organization and has the
\nrequisite corporate power and authority to own or lease all of its properties
\nand assets and to carry on its business as it is now being conducted. Each of
\nthe Company and its Significant Subsidiaries (as defined below) is duly licensed
\nor qualified to do business in each jurisdiction in which the nature of the
\nbusiness conducted by it or the character or location of the properties and
\nassets owned or leased by it makes such licensing or qualification necessary,
\nexcept where the failure to be so licensed or qualified would not reasonably be
\nexpected to have, when aggregated with all other such failures, a Material
\nAdverse Effect (as defined below) on the Company (“Company Material Adverse
\nEffect”). As used in this Agreement, the term “Material Adverse Effect” means, a
\nmaterial adverse effect on the business, operations or financial condition of
\nsuch party and its subsidiaries taken as a whole or a material adverse effect on
\nthe party’s ability to consummate the transactions contemplated hereby;
\nprovided, however, that a “Material Adverse Effect” shall not include any of the
\n——– ——-
\nfollowing or any combination of the following: any change or effect resulting
\nfrom or attributable to (A) general national, international or regional economic
\nor financial conditions, (B) other developments which are not unique to the
\nCompany and its subsidiaries, but also affect other persons who engage in the
\nlines of business in which the Company or its subsidiaries are engaged, (C) the
\nannouncement or pendency of this Agreement or the transactions contemplated
\nhereby (including, if resulting therefrom, employee attrition and delay,
\nreduction or cancellation or change in the terms of orders or purchases from or
\nother transactions with the Company or its subsidiaries), and (D) any change in
\nthe market price of the Company Common Stock, Parent Class A Common Stock, par
\nvalue $5.00 per share, or Parent Class B Stock, or any portfolio securities
\nowned by Parent or its subsidiaries. As used in this Agreement, (i) the word
\n“subsidiary” when used with respect to any party means any corporation,
\npartnership or other organization, whether incorporated or unincorporated, of
\nwhich at least a majority of the securities or other interests having by their
\nterms voting power to elect a majority of the Board of Directors or others
\nperforming similar functions with respect to such corporation or other
\norganization is directly or indirectly beneficially owned or controlled by such
\nparty or by any one or more of its subsidiaries, or by such party and one or
\nmore of its subsidiaries, and (ii) <\/p>\n
11<\/p>\n
“Significant Subsidiary” has the meaning given such term in Rule 405 of the
\nSecurities Act of 1933, as amended (the “Securities Act”). The copies of the
\nArticles of Incorporation and Bylaws of the Company (the “Company Articles” and
\n“Company Bylaws”), as most recently filed with the Company’s SEC Documents (as
\nhereinafter defined), are true, complete and correct copies of such documents as
\nin effect as of the date of this Agreement.<\/p>\n
Section 3.2 Capitalization.
\n ————– <\/p>\n
(a) The authorized capital stock of the Company consists of
\n100,000,000 shares of Company Common Stock and 1,000,000 shares of Company
\nPreferred Stock. At the close of business on June 19, 2000, there were
\n25,775,603 shares of Company Common Stock issued and outstanding, 100 shares of
\nCompany Preferred Stock issued and outstanding (all of which are owned
\nbeneficially and of record by the Stockholder), and 1,705,885 shares of Company
\nCommon Stock issuable upon the exercise of outstanding Company Stock Options
\npursuant to the Option Plans. Except as set forth in Section 3.2(a) of the
\ndisclosure schedule of the Company delivered to Parent concurrently herewith
\n(the “Company Disclosure Schedule”), all of the issued and outstanding shares of
\nCompany Stock have been duly authorized and validly issued and are fully paid,
\nnonassessable and free of preemptive rights. Except as set forth above or in
\nSection 3.2(a) of the Company Disclosure Schedule, as of the date of this
\nAgreement there are not and, as of the Effective Time there will not be, any
\nshares of capital stock issued and outstanding or any subscriptions, options,
\nwarrants, calls, commitments or agreements of any character calling for the
\npurchase or issuance of any securities of the Company, including any securities
\nrepresenting the right to purchase or otherwise receive any Company Stock (other
\nthan the Rights and the conversion rights of the Company Preferred Stock set
\nforth in the Company’s Articles).<\/p>\n
(b) Except as set forth in Section 3.2(b) of the Company
\nDisclosure Schedule, the Company owns, directly or indirectly, all of the issued
\nand outstanding shares of capital stock of each of its Significant Subsidiaries,
\nfree and clear of any liens, charges, encumbrances, adverse rights or claims and
\nsecurity interests whatsoever (“Liens”) which would reasonably be expected to
\nhave, in the aggregate, a Company Material Adverse Effect, and all of such
\nshares are duly authorized and validly issued and are fully paid, nonassessable
\nand free of preemptive rights. None of the Company’s Significant Subsidiaries
\nhas or is bound by any outstanding subscriptions, options, warrants, calls,
\ncommitments or agreements of any character calling for the purchase or issuance
\nof any security of such Significant Subsidiary, including any securities
\nrepresenting the right to purchase or otherwise receive any shares of capital
\nstock or any other equity security of such Significant Subsidiary.<\/p>\n
Section 3.3 Authority.
\n ——— <\/p>\n
(a) The Company has all necessary corporate power and
\nauthority to execute and deliver this Agreement and to consummate the
\ntransactions contemplated hereby, subject to obtaining the approval of holders
\nof 66-2\/3% of the shares of Company Common Stock prior to the consummation of
\nthe Merger in accordance with Article 5.03 of the Texas Act, if so required. The
\nexecution, delivery and performance by the Company of this Agreement, and the
\nconsummation by it of the transactions contemplated hereby, have been duly
\nauthorized by its Board of Directors and, except for obtaining the approval of
\nits stockholders as contemplated <\/p>\n
12<\/p>\n
by Section 1.8 hereof and as required by the Texas Act, no other corporate
\naction on the part of the Company is necessary to authorize the execution and
\ndelivery by the Company of this Agreement and the consummation by it of the
\ntransactions contemplated hereby. This Agreement has been duly executed and
\ndelivered by the Company and, assuming due and valid authorization, execution
\nand delivery hereof by the other parties thereto, constitutes a valid and
\nbinding obligation of the Company enforceable against the Company in accordance
\nwith its terms, except that such enforceability (i) may be limited by
\nbankruptcy, insolvency, moratorium or other similar laws affecting or relating
\nto the enforcement of creditors’ rights generally and (ii) is subject to general
\nprinciples of equity.<\/p>\n
(b) The Board of Directors of the Company has approved and
\ntaken all corporate action required to be taken by the Board of Directors for
\nthe consummation of the transactions contemplated by this Agreement by the
\nCompany.<\/p>\n
Section 3.4 Consents and Approvals; No Violations.
\n ————————————- <\/p>\n
(a) Except for (i) the consents and approvals set forth in
\nSection 3.4(a) of the Company Disclosure Schedule, (ii) the filing with the SEC
\nof the Offer Documents and, if necessary, of the Proxy Statement, (iii) the
\nfiling of the Articles of Merger with the Secretary of State of the State of
\nTexas pursuant to the Texas Act, (iv) if necessary, the adoption of this
\nAgreement by the requisite votes of the stockholders of the Company and (v)
\nfilings, permits, authorizations, consents and approvals as may be required
\nunder, and other applicable requirements of, the Exchange Act and the
\nHart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR
\nAct”), no consents or approvals of, or filings, declarations or registrations
\nwith, any federal, state or local court, administrative or regulatory agency or
\ncommission or other governmental authority or instrumentality, domestic or
\nforeign (each a “Governmental Entity”), are necessary for the consummation by
\nthe Company of the transactions contemplated hereby, other than such other
\nconsents, approvals, filings, declarations or registrations that, if not
\nobtained, made or given, would not reasonably be expected to have, in the
\naggregate, a Company Material Adverse Effect.<\/p>\n
(b) Except as set forth in Section 3.4(b) of the Company
\nDisclosure Schedule, neither the execution and delivery of this Agreement by the
\nCompany nor the consummation by the Company of the transactions contemplated
\nhereby, nor compliance by the Company with any of the terms or provisions
\nhereof, will (i) conflict with or violate any provision of the articles of
\nincorporation or bylaws of the Company or any of the similar organizational
\ndocuments of any of its Significant Subsidiaries or (ii) assuming that the
\nauthorizations, consents and approvals referred to in Section 3.4(a) and the
\nauthorization hereof by the Company’s stockholders are duly obtained in
\naccordance with the Texas Act, (x) violate any statute, code, ordinance, rule,
\nregulation, judgment, order, writ, decree or injunction applicable to the
\nCompany or any of its subsidiaries or any of their respective properties or
\nassets, or (y) violate, conflict with, result in the loss of any material
\nbenefit under, constitute a default (or an event which, with notice or lapse of
\ntime, or both, would constitute a default) under, result in the termination of
\nor a right of termination or cancellation under, accelerate the performance
\nrequired by, or result in the creation of any Lien upon any of the respective
\nproperties or assets of the Company or any of its subsidiaries under, any of the
\nterms, conditions or provisions of any note, bond, mortgage, indenture, deed of
\ntrust, license, lease, agreement or <\/p>\n
13<\/p>\n
other instrument or obligation to which the Company or any of its subsidiaries
\nis a party, or by which they or any of their respective properties or assets may
\nbe bound or affected, except, in the case of clause (ii) above, for such
\nviolations, conflicts, breaches, defaults, losses, terminations of rights
\nthereof, accelerations or Lien creations which, in the aggregate, would not
\nreasonably be expected to have a Company Material Adverse Effect.<\/p>\n
Section 3.5 SEC Documents; Undisclosed Liabilities. The Company has
\n ————————————–
\nfiled all required reports, schedules, forms and registration statements with
\nthe SEC since January 1, 1998 (collectively, and in each case including all
\nexhibits and schedules thereto and documents incorporated by reference therein,
\nthe “SEC Documents”). As of their respective dates, the SEC Documents complied
\nin all material respects with the requirements of the Securities Act or the
\nExchange Act, as the case may be, and the rules and regulations of the SEC
\npromulgated thereunder applicable to such SEC Documents, and none of the SEC
\nDocuments (including any and all financial statements included therein) as of
\nsuch dates contained any untrue statement of a material fact or omitted to state
\na material fact required to be stated therein or necessary in order to make the
\nstatements therein, in light of the circumstances under which they were made,
\nnot misleading. The consolidated financial statements of the Company included in
\nthe SEC Documents (the “SEC Financial Statements”) comply as to form in all
\nmaterial respects with applicable accounting requirements and the published
\nrules and regulations of the SEC with respect thereto, have been prepared in
\naccordance with generally accepted accounting principles (except, in the case of
\nunaudited consolidated quarterly statements, as permitted by Form 10-Q of the
\nSEC) applied on a consistent basis during the periods involved (except as may be
\nindicated in the notes thereto) and fairly present in all material respects the
\nconsolidated financial position of the Company and its consolidated subsidiaries
\nas of the dates thereof and the consolidated results of their operations and
\ncash flows for the periods then ended (subject, in the case of unaudited
\nquarterly statements, to normal year-end audit adjustments). Since December 31,
\n1999, neither the Company nor any of its subsidiaries, has incurred any
\nliabilities or obligations of any nature (whether accrued, absolute, contingent
\nor otherwise) required, if known, to be reflected or reserved against on a
\nconsolidated balance sheet of the Company prepared in accordance with GAAP
\nexcept (i) as and to the extent set forth on the audited balance sheet of the
\nCompany and its subsidiaries as of December 31, 1999 (including the notes
\nthereto), (ii) as incurred in connection with the transactions contemplated by
\nthis Agreement, (iii) as incurred after December 31, 1999 in the ordinary course
\nof business and consistent with past practice, (iv) as described in the SEC
\nDocuments filed since December 31, 1999 (the “Recent SEC Documents”), or (v) as
\nwould not, individually or in the aggregate, have a Company Material Adverse
\nEffect.<\/p>\n
Section 3.6 Broker’s Fees. Except as set forth in Section 3.6 of the
\n ————-
\nCompany Disclosure Schedule, neither the Company nor any subsidiary of the
\nCompany nor any of their respective officers or directors on behalf of the
\nCompany or such subsidiaries has employed any financial advisor, broker or
\nfinder or incurred any liability for any broker’s fees, commissions or finder’s
\nfees in connection with any of the transactions contemplated hereby.<\/p>\n
Section 3.7 Absence of Certain Changes or Events. Except as
\n ————————————
\ndisclosed in the SEC Documents filed prior to the date hereof or as set forth in
\nSection 3.7 of the Company Disclosure Schedule, since December 31, 1999, (a) no
\nevents have occurred which would reasonably be expected to have, in the
\naggregate, a Company Material Adverse Effect and (b) the <\/p>\n
14<\/p>\n
Company and its subsidiaries have carried on and operated their respective
\nbusinesses in all material respects in the ordinary course of business
\nconsistent with past practice, except for such deviations of the Company’s
\nbusiness from the ordinary course of business which would not reasonably be
\nexpected to have, in the aggregate, a Company Material Adverse Effect.<\/p>\n
Section 3.8 Legal Proceedings.
\n —————– <\/p>\n
(a) Except as disclosed in the SEC Documents or in Section 3.8
\nof the Company Disclosure Schedule, neither the Company nor any of its
\nsubsidiaries is a party to any, and there are no pending legal, administrative,
\narbitral or other proceedings, claims, actions or governmental or regulatory
\ninvestigations of any nature against the Company or any of its subsidiaries or
\nchallenging the validity or propriety of the transactions contemplated hereby,
\nwhich proceedings, claims, actions, or investigations, in the aggregate, would
\nreasonably be expected to have a Company Material Adverse Effect.<\/p>\n
(b) Except as set forth in the SEC Documents or in Section 3.8
\nof the Company Disclosure Schedule, there is no injunction, order, judgment,
\ndecree or regulatory restriction imposed upon the Company, any of its
\nsubsidiaries or the assets of the Company or any of its subsidiaries which, when
\naggregated with all other such injunctions, orders, judgments, decrees and
\nrestrictions, would reasonably be expected to have a Company Material Adverse
\nEffect.<\/p>\n
Section 3.9 Compliance with Applicable Law. Except as disclosed in
\n ——————————
\nSection 3.9 of the Company Disclosure Schedule, the Company and each of its
\nsubsidiaries hold all material licenses, franchises, permits and authorizations
\nnecessary for the lawful conduct of their respective businesses as presently
\nconducted and are in compliance with the terms thereof, except where the failure
\nto hold such license, franchise, permit or authorization or such noncompliance
\nwould not, when aggregated with all other such failures or noncompliance,
\nreasonably be expected to have a Company Material Adverse Effect, and neither
\nthe Company nor any of its subsidiaries knows of, or has received notice of, any
\nmaterial violations of any applicable law, statute, order, rule, regulation,
\npolicy and\/or guideline of any Governmental Entity relating to the Company or
\nany of its subsidiaries, which, in the aggregate, would reasonably be expected
\nto have a Company Material Adverse Effect.<\/p>\n
Section 3.10 Company Information. The information relating to the
\n ——————-
\nCompany and its subsidiaries to be provided by the Company to be contained in
\nthe Proxy Statement, if any, or the Offer Documents, or in any other document
\nfiled with any other Governmental Entity in connection herewith at the
\nrespective times filed with the SEC or such other Governmental Entity and first
\npublished, sent or given to stockholders of the Company and, in addition, in the
\ncase of the Proxy Statement, at the date it or any amendment or supplement is
\nmailed to holders of the shares of Company Common Stock, at the time of the
\nSpecial Meeting and at the Effective Time, will not contain any untrue statement
\nof a material fact or omit to state a material fact necessary to make the
\nstatements therein, in light of the circumstances in which they are made, not
\nmisleading. The Schedule 14D-9 (except that no representation is made by the
\nCompany to such portions thereof that relate only to Parent or any of their
\nsubsidiaries or to statements made therein based on information supplied by
\nParent or the Purchaser for inclusion therein) will <\/p>\n
15<\/p>\n
comply as to form in all material respects with the provisions of the Exchange
\nAct and the rules and regulations thereunder.<\/p>\n
Section 3.11 Opinion of Financial Advisor. The Company’s Board of
\n —————————-
\nDirectors has received the opinion of Donaldson, Lufkin & Jenrette, financial
\nadvisor to the Company’s Board of Directors, to the effect that, as of the date
\nof such opinion, the consideration to be received in the Offer and the Merger by
\nthe holders of shares of Company Common Stock is fair to the holders of such
\nshares from a financial point of view.<\/p>\n
Section 3.12 Employee Matters. The Company has delivered or made
\n —————-
\navailable to Parent full and complete copies or descriptions of each material
\nemployment, severance, bonus, change-in-control, profit sharing, compensation,
\ntermination, stock option, stock appreciation right, restricted stock, phantom
\nstock, performance unit, pension, retirement, deferred compensation, welfare or
\nother employee benefit agreement, trust fund or other arrangement and any union,
\nguild or collective bargaining agreement maintained or contributed to or
\nrequired to be contributed to by the Company or any of its ERISA Affiliates (as
\ndefined below), for the benefit or welfare of any director, officer, employee or
\nformer employee of the Company or any of its ERISA Affiliates (such plans and
\narrangements being collectively the “Company Benefit Plans”). Each of the
\nCompany Benefit Plans is in material compliance with all applicable laws
\nincluding ERISA and the Code except where such noncompliance would not
\nreasonably be expected to have a Company Material Adverse Effect. The Internal
\nRevenue Service has determined that each Company Benefit Plan that is intended
\nto be a qualified plan under Section 401(a) of the Code is so qualified and the
\nCompany is aware of no event occurring after the date of such determination that
\nwould adversely affect such determination. The liabilities accrued under each
\nsuch plan are reflected on the latest balance sheet of the Company included in
\nthe Recent SEC Reports in accordance with generally accepted accounting
\nprinciples applied on a consistent basis. No condition exists that is
\nreasonably likely to subject the Company or any of its subsidiaries to any
\ndirect or indirect liability under Title IV of ERISA or to a civil penalty under
\nSection 502(j) of ERISA or liability under Section 4069 of ERISA or 4975, 4976,
\nor 4980B of the Code or the loss of a federal tax deduction under Section 280G
\nof the Code or other liability with respect to the Company Benefit Plans that
\nwould have a Company Material Adverse Effect and that is not reflected on such
\nbalance sheet. There are no pending or to the Company’s knowledge, threatened,
\nclaims (other than routine claims for benefits or immaterial claims) by, on
\nbehalf of or against any of the Company Benefit Plans or any trusts related
\nthereto except where such claims would not reasonably be expected to have a
\nCompany Material Adverse Effect. “ERISA Affiliate” means, with respect to any
\nperson, any trade or business, whether or not incorporated, that together with
\nsuch person would be deemed a “single employer” within the meaning of Section
\n4001(a)(15) of the Employee Retirement Income Security Act of 1974, as amended
\n(“ERISA”).<\/p>\n
Section 3.13 Environmental Matters. Except as set forth in Section
\n ———————
\n3.13 of the Company’s Disclosure Schedule, there are no legal, administrative,
\narbitral or other proceedings, claims, actions, causes of action, required
\nenvironmental remediation activities or, to the knowledge of the Company,
\ngovernmental investigations of any nature seeking to impose, or that reasonably
\ncould be expected to result in the imposition, on the Company or any of its
\nsubsidiaries of any liability or obligations arising under common law standards
\nrelating to environmental protection, human health or safety, or under any
\nlocal, state, federal, national or <\/p>\n
16<\/p>\n
supernational environmental statute, regulation or ordinance, including the
\nComprehensive Environmental Response, Compensation and Liability Act of 1980, as
\namended (collectively, “Environmental Laws”), pending or, to the knowledge of
\nthe Company, threatened, against the Company or any of its subsidiaries, which
\nliability or obligation would have or would reasonably be expected to have a
\nCompany Material Adverse Effect. To the knowledge of the Company, during or
\nprior to the period of (i) its or any of its subsidiaries’ ownership or
\noperation of any of their respective current properties, (ii) its or any of its
\nsubsidiaries’ participation in the management of any property, or (iii) its or
\nany of its subsidiaries’ holding of a security interest or other interest in any
\nproperty, there was no release or threatened release of hazardous, toxic,
\nradioactive or dangerous materials or other materials regulated under
\nEnvironmental Laws in, on, under or affecting any such property which would
\nreasonably be expected to have a Company Material Adverse Effect. Neither the
\nCompany nor any of its subsidiaries is subject to any agreement, order,
\njudgment, decree, letter or memorandum by or with any court, governmental
\nauthority, regulatory agency or third party imposing any material liability or
\nobligations pursuant to or under any Environmental Law that would have or would
\nreasonably be expected to have a Company Material Adverse Effect.<\/p>\n
Section 3.14 Takeover Statutes. The Company has taken all actions
\n —————–
\nnecessary such that no restrictive provision of any “fair price,” “moratorium,”
\n“control share acquisition,” “interested shareholder” or other similar anti-
\ntakeover statute or regulation (including, without limitation, Article 13 of the
\nTexas Act) (each a “Takeover Statute”) or restrictive provision of any
\napplicable anti-takeover provision in the governing documents of the Company is,
\nor at the Effective Time will be, applicable to the Company, Parent, the
\nPurchaser, the shares of Company Stock, the Offer, the Merger or any other
\ntransaction contemplated by this Agreement.<\/p>\n
Section 3.15 Rights Agreement. The Company has taken all action
\n —————-
\nrequired so that the entering into of this Agreement and the Stockholder
\nAgreement, and the consummation of the transactions contemplated hereby and
\nthereby do not and will not enable or require the Rights to be separated from
\nthe shares of Company Common Stock with which the Rights are associated, or to
\nbe distributed, exercisable, exercised, or nonredeemable or result in the Rights
\nassociated with any Company Common Stock beneficially owned by Parent or any of
\nits affiliates or associates (as defined in the Rights Agreement) to be void or
\nvoidable. The Company has delivered to Purchaser a true and correct copy of the
\nRights Agreement, as amended in accordance with its terms to render it
\ninapplicable to the Offer, the Merger, and the other transactions contemplated
\nby this Agreement and the Stockholder Agreement.<\/p>\n
Section 3.16 Properties. Except as disclosed in the Recent SEC
\n ———-
\nDocuments and for any of the following which would not have a Company Material
\nAdverse Effect, each of the Company and its subsidiaries (i) has good and
\nindefeasible title to all the properties and assets reflected on the latest
\naudited balance sheet included in such Recent SEC Documents as being owned by
\nthe Company or one of its subsidiaries or acquired after the date thereof which
\nare, individually or in the aggregate, material to the Company’s business on a
\nconsolidated basis (except properties sold or otherwise disposed of since the
\ndate thereof in the ordinary course of business), free and clear of (A) all
\nLiens except (1) statutory liens securing payments not yet due and (2) such
\nimperfections or irregularities of title or other Liens (other than real
\nproperty mortgages or deeds of trust) as do not materially affect the use of the
\nproperties or assets subject thereto or affected thereby or otherwise materially
\nimpair business operations at such properties, <\/p>\n
17<\/p>\n
and (B) all real property mortgages and deeds of trust except such secured
\nindebtedness as is properly reflected in the latest audited balance sheet
\nincluded in such Recent SEC Documents, and (ii) is the lessee of all leasehold
\nestates reflected in the latest audited financial statements included in such
\nRecent SEC Documents or acquired after the date thereof which are material to
\nits business on a consolidated basis and is in possession of the properties
\npurported to be leased thereunder, and each such lease is valid without material
\ndefault thereunder by the lessee or, to the Company’s knowledge, the lessor.<\/p>\n
Section 3.17 Tax Returns and Tax Payments. The Company and its
\n —————————-
\nsubsidiaries have timely filed (or, as to subsidiaries, the Company has filed on
\nbehalf of such subsidiaries) all material Tax Returns (as defined below)
\nrequired to be filed by it, except for such failure that would not result in a
\nCompany Material Adverse Effect. The Company and its subsidiaries have paid (or,
\nas to subsidiaries, the Company has paid on behalf of such subsidiaries) all
\nTaxes (as defined below) shown to be due on such Tax Returns or has provided
\n(or, as to Subsidiaries, the Company has made provision on behalf of such
\nSubsidiaries) reserves in its financial statements for any Taxes that have not
\nbeen paid, whether or not shown as being due on any Tax Returns, except for such
\nTaxes which, if unpaid or unreserved, would not result in a Company Material
\nAdverse Effect. Neither the Company nor any of its subsidiaries has granted any
\nrequest that remains in effect for waivers of the time to assess any Taxes.
\nExcept as disclosed in Section 3.17 of the Company’s Disclosure Schedule, no
\nclaim for unpaid Taxes has been asserted against the Company or any of its
\nSubsidiaries in writing by a Tax authority which, if resolved in a manner
\nunfavorable to the Company or any of its Subsidiaries, as the case may be, would
\nresult, individually or in the aggregate, in a Company Material Adverse Effect.
\nThere are no Liens for Taxes upon the assets of the Company or any Subsidiary,
\nexcept for Liens for Taxes not yet due and payable or for Taxes that are being
\ndisputed in good faith by appropriate proceedings and with respect to which
\nadequate reserves have been taken, that could result in a Company Material
\nAdverse Effect. Except as discussed in Section 3.16 of the Company Disclosure
\nSchedule, no audit of any material Tax Return of the Company or any of its
\nsubsidiaries is being conducted by a Tax authority. None of the Company or any
\nof its subsidiaries has made an election under Section 341(f) of the Code.
\nExcept as disclosed in Section 3.16 of the Company Disclosure Schedule, neither
\nthe Company nor any of its subsidiaries has any liability for Taxes of any
\nperson (other than the Company and its subsidiaries) under Treasury Regulation
\nSection 1.1502-6 (or any comparable provision of state, local or foreign law).
\nAs used herein, “Taxes” shall mean all taxes of any kind, including, without
\nlimitation, those on or measured by or referred to as income, gross receipts,
\nsales, use, ad valorem, franchise, profits, license, value added, property or
\nwindfall profits taxes, customs, duties or similar fees, assessments or charges
\nof any kind whatsoever, together with any interest and any penalties, additions
\nto tax or additional amounts imposed by any governmental authority, domestic or
\nforeign. As used herein, “Tax Return” shall mean any return, report or statement
\nrequired to be filed with any governmental authority with respect to Taxes. As
\nused herein, “Code” shall mean the Code and the Treasury Regulations promulgated
\nthereunder.<\/p>\n
Section 3.18 Intellectual Property. Except as set forth in Section
\n ———————
\n3.18 of the Company’s Disclosure Schedule, the Company or its subsidiaries own,
\nor are licensed or otherwise possess legally enforceable rights to use all
\npatents, trademarks, trade names, service marks, copyrights and any applications
\ntherefor, technology, know-how, trade secrets, computer software programs or
\napplications, domain names and tangible or intangible proprietary <\/p>\n
18<\/p>\n
information or materials that are used in the respective businesses of the
\nCompany and its subsidiaries as currently conducted, except for any such
\nfailures to own, be licensed or possess that, individually or in the aggregate,
\nhas not had and is not reasonably likely in the future to have a Company
\nMaterial Adverse Effect. All patents, registered trademarks and service marks
\nand registered copyrights held by the Company or its subsidiaries are subsisting
\nand in force except where failure to be subsisting and in force would not likely
\ncause a Company Material Adverse Effect.<\/p>\n
ARTICLE IV<\/p>\n
REPRESENTATIONS AND WARRANTIES OF
\n PARENT AND PURCHASER<\/p>\n
Parent and Purchaser jointly and severally represent and warrant to
\nthe Company as follows:<\/p>\n
Section 4.1 Corporate Organization. Each of Parent and Purchaser is
\n ———————-
\na corporation duly organized, validly existing and in good standing under the
\nlaws of the jurisdiction of its organization and has the requisite corporate
\npower and authority to own or lease all of its properties and assets and to
\ncarry on its business as it is now being conducted. Each of Parent and its
\nSignificant Subsidiaries is duly licensed or qualified to do business in each
\njurisdiction in which the nature of the business conducted by it or the
\ncharacter or location of the properties and assets owned or leased by it makes
\nsuch licensing or qualification necessary, except where the failure to be so
\nlicensed or qualified would not reasonably be expected to have, when aggregated
\nwith all other such failures, a Material Adverse Effect on the Parent (a “Parent
\nMaterial Adverse Effect).<\/p>\n
Section 4.2 Authority. Each of Parent and Purchaser has all
\n ———
\nnecessary corporate power and authority to execute and deliver this Agreement
\nand to consummate the transactions contemplated hereby. The execution, delivery
\nand performance by Parent and Purchaser of this Agreement, and the consummation
\nof the transactions contemplated hereby, have been duly authorized and approved
\nby their Boards of Directors and by Parent as the sole stockholder of Purchaser
\nand no other corporate action on the part of Parent or Purchaser is necessary to
\nauthorize the execution and delivery by Parent and Purchaser of this Agreement
\nand the consummation by them of the transactions contemplated hereby. This
\nAgreement has been duly executed and delivered by Parent and Purchaser, and,
\nassuming due and valid authorization, execution and delivery hereof by the
\nCompany, is a valid and binding obligation of each of Parent and Purchaser,
\nenforceable against each of them in accordance with its terms, except that such
\nenforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
\nsimilar laws affecting or relating to the enforcement of creditors’ rights
\ngenerally and (ii) is subject to general principles of equity.<\/p>\n
Section 4.3 Consents and Approvals: No Violation.
\n ———————————— <\/p>\n
(a) Except for (i) the filing with the SEC of the Offer
\nDocuments, (ii) the filing of the Articles of Merger with the Secretary of State
\nof the State of Texas pursuant to the Texas Act, and (iii) filings, permits,
\nauthorizations, consents and approvals as may be <\/p>\n
19<\/p>\n
required under, and other applicable requirements of, the Exchange Act, the HSR
\nAct and the Securities Act, no consents or approvals of, or filings,
\ndeclarations or registrations with, any Governmental Entity are necessary for
\nthe consummation by Parent and Purchaser of the transactions contemplated
\nhereby, other than such other consents, approvals, filings, declarations or
\nregistrations that, if not obtained, made or given, would not reasonably be
\nexpected to have, in the aggregate, a Parent Material Adverse Effect.<\/p>\n
(b) Neither the execution and delivery of this Agreement by
\nParent or the Purchaser, nor the consummation by Parent or the Purchaser of the
\ntransactions contemplated hereby, nor compliance by Parent or the Purchaser with
\nany of the terms or provisions hereof, will (i) conflict with or violate any
\nprovision of the Restated Certificate of Incorporation or Bylaws of Parent or
\nany of the similar organizational documents of Purchaser or any of Parent’s
\nSignificant Subsidiaries or (ii) assuming that the authorizations, consents and
\napprovals referred to in Section 4.3(a) are obtained, (x) violate any statute,
\ncode, ordinance, rule, regulation, judgment, order, writ, decree or injunction
\napplicable to Parent or any of its subsidiaries or any of their respective
\nproperties or assets, or (y) violate, conflict with, result in the loss of any
\nmaterial benefit under, constitute a default (or an event which, with notice or
\nlapse of time, or both, would constitute a default) under, result in the
\ntermination of or a right of termination or cancellation under, accelerate the
\nperformance required by, or result in the creation of any Lien upon any of the
\nrespective properties or assets of Parent or Purchaser or any of Parent’s
\nsubsidiaries under, any of the terms, conditions or provisions of any note,
\nbond, mortgage, indenture, deed of trust, license, lease, agreement or other
\ninstrument or obligation to which Parent, Purchaser or any of Parent’s
\nsubsidiaries is a party, or by which they or any of their respective properties
\nor assets may be bound or affected, except, in the case of clause (ii) above,
\nfor such violations, conflicts, breaches, defaults, losses, terminations of
\nrights thereof, accelerations or Lien creations which, in the aggregate, would
\nnot reasonably be expected to have a Parent Material Adverse Effect.<\/p>\n
Section 4.4 Broker’s Fees. Neither Parent nor any subsidiary of
\n ————-
\nParent nor any of their respective officers or directors on behalf of Parent or
\nsuch subsidiaries has employed any financial advisor, broker or finder in a
\nmanner that would result in any liability of the Company for any broker’s fees,
\ncommissions or finder’s fees in connection with any of the transactions
\ncontemplated hereby or that would result in any reduction of the consideration
\npayable to the shareholders of the Company.<\/p>\n
Section 4.5 Purchaser’s Operation. Purchaser was formed solely for
\n ———————
\nthe purpose of engaging in the transactions contemplated hereby and has not
\nengaged in any business activities or conducted any operations other than in
\nconnection with the transactions contemplated hereby.<\/p>\n
Section 4.6 Parent or Purchaser Information. The information
\n ——————————-
\nrelating to Parent and its subsidiaries to be provided by Parent to be contained
\nin the Offer Documents and the Proxy Statement, if any, or in any other document
\nfiled with any other Governmental Entity in connection herewith, at the
\nrespective time filed with the SEC or such other Governmental Entity and, in
\naddition, in the case of the Proxy Statement, at the date it or any amendment or
\nsupplement is mailed to holders of the Shares, at the time of the Special
\nMeeting and at the Effective Time, will not contain any untrue statement of a
\nmaterial fact or omit to state a material <\/p>\n
20<\/p>\n
fact necessary to make the statements therein, in light of the circumstances in
\nwhich they are made, not misleading. The Offer Documents and the Proxy
\nStatement, if any (except that no representation is made as to such portions
\nthereof that relate only to the Company or any of its subsidiaries or to
\nstatements made therein based on information supplied by the Company for
\ninclusion therein) will comply in all material respects with the provisions of
\nthe Exchange Act and the rules and regulations thereunder and the Securities Act
\nand the rules and regulations thereunder, respectively.<\/p>\n
Section 4.7 Financing. Parent and Purchaser collectively have and
\n ———
\nwill have at the Expiration Date of the Offer and at the Effective Time, and
\nParent will make available to Purchaser, sufficient funds to enable Purchaser to
\npay for all outstanding shares of Company Stock purchased pursuant to the Offer
\nor converted into cash pursuant to the Merger, to perform Parent’s and
\nPurchaser’s obligations under this Agreement and to pay all fees and expenses
\nrelated to the transactions contemplated by this Agreement payable by them.<\/p>\n
Section 4.8 Stock Ownership. As of the date hereof, neither Parent
\n —————
\nnor the Purchaser beneficially owns any Shares.<\/p>\n
Section 4.9 Purchaser Capitalization. The authorized capital stock
\n ————————
\nof Purchaser consists of 100 shares of common stock, par value $.01 per share,
\nall of which shares have been validly issued, are fully paid and nonassessable
\nand are owned by Parent free and clear of any liens.<\/p>\n
ARTICLE V<\/p>\n
COVENANTS<\/p>\n
Section 5.1 Conduct of Businesses Prior to the Effective Time.
\n ————————————————-
\nExcept as set forth in Section 5.1 of the Company Disclosure Schedule, as
\nexpressly contemplated or permitted by this Agreement, or as required by
\napplicable law, rule or regulation, during the period from the date of this
\nAgreement to the Effective Time, unless Parent otherwise agrees in writing, the
\nCompany shall, and shall cause its subsidiaries to, in all material respects,
\n(i) conduct its business in the usual, regular and ordinary course consistent
\nwith past practice and (ii) use all reasonable efforts to maintain and preserve
\nintact its business organization and the good will of those having business
\nrelationships with it and retain the services of its present officers and key
\nemployees. Without limiting the generality of the foregoing, and except as set
\nforth in Section 5.1 of the Company Disclosure Schedule, as expressly
\ncontemplated or permitted by this Agreement, or as required by applicable law,
\nrule or regulation, during the period from the date of this Agreement to the
\nEffective Time, the Company shall not, and shall not permit any of its
\nsubsidiaries to, without the prior written consent of Parent:<\/p>\n
(a) (i) issue, sell, grant, dispose of, pledge or otherwise encumber,
\nor authorize or propose the issuance, sale, disposition or pledge or other
\nencumbrance of (A) any additional shares of its capital stock or any securities
\nor rights convertible into, exchangeable for, or evidencing the right to
\nsubscribe for any shares of its capital stock, or any rights, warrants, option,
\ncalls, commitments or any other agreements of any character to purchase or
\nacquire any shares of its capital stock or any securities or rights convertible
\ninto, exchangeable for, or<\/p>\n
21<\/p>\n
evidencing the right to subscribe for, any shares of its capital stock or (B)
\nany other securities in respect of, in lieu of, or in substitution for, any
\nshares of its capital stock outstanding on the date hereof, other than pursuant
\nto the exercise of Company Stock Options outstanding as of the date hereof; (ii)
\nredeem, purchase or otherwise acquire, or propose to redeem, purchase or
\notherwise acquire, any of its outstanding shares of capital stock; or (iii)
\nsplit, combine, subdivide or reclassify any shares of its capital stock or
\ndeclare, set aside for payment or pay any dividend, or make any other actual,
\nconstructive or deemed distribution, in respect of any shares of its capital
\nstock or otherwise make any payments to its stockholders in their capacity as
\nsuch, other than the payment of the cash dividend of $.06 per share of Company
\nCommon Stock declared on June 14, 2000 payable on July 5, 2000 to holders of
\nrecord on June 25, 2000;<\/p>\n
(b) other than in the ordinary course of business consistent
\nwith past practice, incur any indebtedness for borrowed money or guarantee any
\nsuch indebtedness or make any loans, advances or capital contributions to, or
\ninvestments in, any other person other than the Company or its subsidiaries;<\/p>\n
(c) sell, transfer, mortgage, encumber or otherwise dispose of
\nany of its properties or assets with a minimum value in excess of $10 million to
\nany individual, corporation or other entity other than a direct or indirect
\nwholly owned subsidiary, or cancel, release or assign any indebtedness in excess
\nof $1 million to any such person or any claims held by any such person, in each
\ncase that is material to the Company and its subsidiaries, taken as a whole,
\nexcept (i) in the ordinary course of business consistent with past practice, or
\n(ii) pursuant to contracts or agreements in force at the date of this Agreement;<\/p>\n
(d) make any material acquisition or investment in a business
\neither by purchase of stock or securities, merger or consolidation,
\ncontributions to capital, property transfers, or purchases of any property or
\nassets of any other individual, corporation or other entity other than a wholly
\nowned subsidiary thereof, or purchase or enter into any agreement to purchase
\nequipment, materials, supplies, or services in excess of $10 million in any one
\ntransaction or $20 million in the aggregate;<\/p>\n
(e) increase in any manner the compensation of any of its
\ndirectors, officers or employees or enter into, establish, amend or terminate
\nany employment, consulting, retention, change in control, collective bargaining,
\nbonus or other incentive compensation, profit sharing, health or other welfare,
\nstock option or other equity, pension, retirement, vacation, severance, deferred
\ncompensation or other compensation or benefit plan, policy, agreement, trust,
\nfund or arrangement with, for or in respect of, any stockholder, officer,
\ndirector, other employee, agent, consultant or affiliate other than (i) as
\nrequired pursuant to the terms of agreements in effect on the date of this
\nAgreement, and (ii) increases in salaries, wages and benefits of employees who
\nare not directors or officers of the Company made in the ordinary course of
\nbusiness and in a manner consistent with past practice;<\/p>\n
(f) amend its articles of incorporation, bylaws or similar
\ngoverning documents;<\/p>\n
(g) waive or fail to enforce any provision of any
\nconfidentiality or standstill agreement to which it is a party; or<\/p>\n
22<\/p>\n
(h) make any commitment to take any of the actions prohibited
\nby this Section 5.1.<\/p>\n
Section 5.2 No Solicitation.
\n —————
\n (a) The Company shall immediately cease any discussions or
\nnegotiations with any parties that may be ongoing with respect to a Takeover
\nProposal (as hereinafter defined) and shall seek to have returned to the Company
\nany confidential information that has been provided in any such discussions or
\nnegotiations. From the date hereof, the Company shall not, nor shall it permit
\nany of its subsidiaries to, nor shall it authorize or permit any of its
\nofficers, directors or employees or any affiliate, investment banker, financial
\nadvisor, attorney, accountant or other representative retained by it or any of
\nits subsidiaries to, directly or indirectly, (i) solicit, initiate or knowingly
\nencourage (including by way of furnishing information which has not been
\npreviously publicly disseminated), or take any other action designed to
\nfacilitate, any inquiries or the making of any proposal which constitutes, or
\nmay reasonably be expected to lead to, any Takeover Proposal or (ii) participate
\nin any discussions or negotiations regarding any Takeover Proposal; provided,
\n ——–
\nhowever, that if, prior to the Expiration Date and following the receipt of
\n——-
\na Superior Proposal (as hereinafter defined) or a proposal which is reasonably
\nexpected to lead to a Superior Proposal that was unsolicited and made after the
\ndate hereof in circumstances not otherwise involving a breach of this Agreement,
\nthe Board of Directors of the Company determines in good faith, after
\nconsidering applicable provisions of state law and after consultation with
\noutside counsel, that a failure to do so would constitute a breach of its
\nfiduciary duties to the Company’s shareholders under applicable law, the Company
\nmay, in response to such Takeover Proposal and subject to compliance with
\nSection 5.2(c), (x) furnish information with respect to the Company to the party
\nmaking such Takeover Proposal pursuant to a customary confidentiality agreement,
\nprovided that (i) such confidentiality agreement must include a provision
\nprohibiting solicitation of key employees of the Company or its subsidiaries,
\nsuch provision lasting at least one year, and may not include any provision
\ncalling for an exclusive right to negotiate with the Company and (ii) the
\nCompany advises Parent of all such nonpublic information delivered to such
\nperson concurrently with its delivery to the requesting party, and (y)
\nparticipate in negotiations with such party regarding such Takeover Proposal. It
\nis agreed that any violation of the restrictions set forth in the preceding
\nsentence by any executive officer of the Company or any of its subsidiaries or
\nany affiliate, director or investment banker, attorney or other advisor or
\nrepresentative of the Company or any of its subsidiaries, if known by the
\nCompany, shall be deemed to be a breach of this Section 5.2(a) by the Company.<\/p>\n
(b) Except as expressly permitted in this Section 5.2,
\nneither the Board of Directors of the Company nor any committee thereof shall
\n(i) withdraw or modify, or propose publicly to withdraw or modify, in a manner
\nadverse to Parent, the approval, determination of advisability, or
\nrecommendation by such Board of Directors or such committee of the Transactions,
\n(ii) approve, determine to be advisable, or recommend, or propose publicly to
\napprove, determine to be advisable, or recommend, any Takeover Proposal or (iii)
\ncause the Company to enter into any letter of intent, agreement in principle,
\nacquisition agreement or other similar agreement (each, an “Acquisition
\nAgreement”) related to any Takeover Proposal. Notwithstanding the foregoing, in
\nthe event that prior to the Expiration Date the Board of Directors of the
\nCompany determines in good faith, in response to a Superior Proposal that was<\/p>\n
23<\/p>\n
unsolicited and made after the date hereof in circumstances not otherwise
\ninvolving a breach of this Agreement, after considering applicable provisions of
\nstate law and after consultation with outside counsel, that the failure to do so
\nwould constitute a breach of its fiduciary duties to the Company’s stockholders
\nunder applicable law, the Board of Directors of the Company may (subject to this
\nand the following sentences and to compliance with Section 5.2(a)) (x) withdraw
\nor modify its approval, determination, or recommendation of the Transactions or
\n(y) approve, determine to be advisable, or recommend a Superior Proposal,
\nprovided, however, that any actions described in clause (y) may be taken
\n——– ——-
\nonly at a time that is after the second business day following Parent’s receipt
\nof written notice from the Company advising Parent that the Board of Directors
\nof the Company has received a Superior Proposal, specifying the material terms
\nand conditions of such Superior Proposal, identifying the person making such
\nSuperior Proposal and providing notice of the determination of the Board of
\nDirectors of the Company of what action referred to in clause (y) the Board of
\nDirectors of the Company has determined to take.<\/p>\n
(c) In addition to the obligations of the Company set forth
\nin paragraphs (a) and (b) of this Section 5.2, the Company shall promptly advise
\nParent orally and in writing of any request for confidential information or of
\nany Takeover Proposal, the material terms and conditions of such request or the
\nTakeover Proposal and the identity of the person making such request or Takeover
\nProposal and shall keep Parent reasonably informed of the status and details of
\nany such request or Takeover Proposal.<\/p>\n
(d) Nothing contained in this Section 5.2 shall prohibit the
\nCompany from taking and disclosing to its stockholders a position contemplated
\nby Rule 14e-2(a) promulgated under the Exchange Act or from making any
\ndisclosure to the Company’s stockholders; provided, however, neither the Company
\n ——– ——-
\nnor its Board of Directors nor any committee thereof shall, except as in
\naccordance with Section 5.2(b), withdraw or modify, or propose publicly to
\nwithdraw or modify, its approval, determination or recommendation with respect
\nto the Transactions or approve, determine to be advisable, or recommend, or
\npropose publicly to approve, determine to be advisable, or recommend, a Takeover
\nProposal.<\/p>\n
(e) For purposes of this Agreement:<\/p>\n
(i) “Takeover Proposal” means any inquiry, proposal or
\noffer from any person (other than Parent and its subsidiaries, affiliates, and
\nrepresentatives) relating to any direct or indirect acquisition or purchase of
\n15% or more of the assets of the Company and its subsidiaries or 15% or more of
\nany class of equity securities of the Company or any of its Significant
\nSubsidiaries, any tender offer or exchange offer that if consummated would
\nresult in any person beneficially owning 15% or more of any class of equity
\nsecurities of the Company or any of its Significant Subsidiaries, or any merger,
\nconsolidation, share exchange, business combination, recapitalization,
\nliquidation, dissolution or similar transaction involving the Company or any of
\nits Significant Subsidiaries, other than the transactions contemplated by this
\nAgreement.<\/p>\n
(ii) For purposes of this Agreement, a “Superior
\nProposal” means a bona fide written offer from any person (other than Parent and
\nits subsidiaries, affiliates and representatives) for a direct or indirect
\nacquisition or purchase of 50% or more of the assets of the Company or any of
\nits Significant Subsidiaries or 50% or more of any class of equity<\/p>\n
24<\/p>\n
securities of the Company or any of its Significant Subsidiaries, any tender
\noffer or exchange offer that if consummated would result in any person
\nbeneficially owning 50% or more of any class of equity securities of the Company
\nor any of its Significant Subsidiaries, or any merger, consolidation, share
\nexchange, business combination, recapitalization, liquidation, dissolution or
\nsimilar transaction involving the Company or any of its Significant
\nSubsidiaries, other than the transactions contemplated by this Agreement, (A)
\nwhich provides for consideration on a per share basis to the stockholders of the
\nCompany with a value (taking into account, among other things, the likelihood of
\nsuch offer resulting in a consummated transaction) exceeding the Offer Price,
\n(B) which, considering all relevant factors, is more favorable to the Company
\nand its stockholders than the Offer and the Merger, and (C) for which the third
\nparty has demonstrated that financing is reasonably likely to be obtained, in
\neach case as determined by the Board of Directors in its good faith judgment
\n(based on the advice of independent financial advisors and outside counsel). Any
\nSuperior Proposal is a Takeover Proposal.<\/p>\n
Section 5.3 Publicity. The initial press release with respect to
\n ———
\nthe execution of this Agreement shall be a joint press release reasonably
\nacceptable to Parent and the Company. Thereafter, so long as this Agreement is
\nin effect, neither the Company, Parent nor any of their respective affiliates
\nshall issue or cause the publication of any press release or other announcement
\nwith respect to the Offer, the Merger, this Agreement or the other transactions
\ncontemplated hereby without the prior consultation of the other party, except as
\nmay be required by law or by any listing agreement with a national securities
\nexchange as determined in the good faith judgment of the party wanting to make
\nsuch release.<\/p>\n
Section 5.4 Notification of Certain Matters. The Company shall
\n ——————————-
\ngive prompt notice to Parent, and Parent shall give prompt notice to the
\nCompany, of (i) the occurrence or non-occurrence of any event the occurrence or
\nnon-occurrence of which would cause any representation or warranty contained in
\nthis Agreement to be untrue or inaccurate in any material respect at or prior to
\nthe Effective Time and (ii) any material failure of the Company or Parent, as
\nthe case may be, to comply with or satisfy any covenant, condition or agreement
\nto be complied with or satisfied by it hereunder; provided, however, that the
\n ——– ——-
\ndelivery of any notice pursuant to this Section 5.4 shall not limit or otherwise
\naffect the remedies available hereunder to the party receiving such notice.<\/p>\n
Section 5.5 Access to Information.
\n ——————— <\/p>\n
(a) Upon reasonable notice and subject to applicable laws
\nrelating to the exchange of information, the Company shall, and shall cause each
\nof its subsidiaries to, afford to the officers, employees, accountants, counsel
\nand other representatives of the Parent, during normal business hours during the
\nperiod prior to the Effective Time, reasonable access to all its properties,
\nbooks, contracts, commitments and records, and to its officers, employees,
\naccountants, counsel and other representatives and, during such period, the
\nCompany shall, and shall cause its subsidiaries to, make available to the Parent
\n(i) a copy of each report, schedule, registration statement and other document
\nfiled or received by it during such period pursuant to the requirements of
\nfederal securities laws and (ii) all other information concerning its business,
\nproperties and personnel as such other party may reasonably request.<\/p>\n
25<\/p>\n
(b) No investigation by any of the parties or their
\nrespective representatives shall affect the representations, warranties,
\ncovenants or agreements of the other set forth herein.<\/p>\n
(c) The information provided pursuant to Section 5.5(a) will
\nbe used solely for the purpose of the transactions contemplated hereby, and
\nunless and until the Merger is consummated, such information will be kept secret
\nand confidential by Parent and Purchaser, except that the information provided
\npursuant to Section 5.5(a) or portions thereof may be disclosed to those of
\nParent’s and Purchaser’s or their affiliates’ directors, officers, employees,
\nagents and advisors (collectively, the “Representatives”) who (a) need to know
\nsuch information for the purpose of the transactions contemplated hereby, (b)
\nshall be advised by Parent or Purchaser, as the case may be, of this provision,
\n(c) agree to hold the information provided pursuant to Section 5.5(a) as secret
\nand confidential and (d) agree with Parent and Purchaser to be bound by the
\nprovisions hereof. Parent and Purchaser jointly agree to be responsible for any
\nbreach of this section by any of their Representatives. If this Agreement is
\nterminated, Parent shall, and shall cause the Purchaser and each of their
\nRepresentatives to, return or destroy (and certify destruction of) all
\ninformation provided pursuant to Section 5.5(a).<\/p>\n
Section 5.6 Further Assurances.
\n —————— <\/p>\n
(a) Subject to the terms and conditions of this Agreement,
\neach of Parent and the Company shall, and shall cause its subsidiaries to, use
\nall reasonable efforts (i) to take, or cause to be taken, all actions necessary,
\nproper or advisable to comply promptly with all legal requirements which may be
\nimposed on such party or its subsidiaries with respect to the Merger and,
\nsubject to the conditions set forth in Article VI hereof, to consummate the
\ntransactions contemplated by this Agreement, including, without limitation, the
\nOffer and the Merger, as promptly as practicable and (ii) to obtain (and to
\ncooperate with the other party to obtain) any consent, authorization, order or
\napproval of, or any exemption by, any Governmental Entity and any other third
\nparty which is required to be obtained by the Company or Parent or any of their
\nrespective subsidiaries in connection with the Merger and the other transactions
\ncontemplated by this Agreement, and to comply with the terms and conditions of
\nany such consent, authorization, order or approval.<\/p>\n
(b) Subject to the terms and conditions of this Agreement,
\neach of Parent and the Company shall use all reasonable efforts to take, or
\ncause to be taken, all actions, and to do, or cause to be done, all things
\nnecessary, proper or advisable to consummate and make effective, as soon as
\npracticable after the date of this Agreement, the transactions contemplated
\nhereby, including, without limitation, using all reasonable efforts to lift or
\nrescind any injunction or restraining order or other order adversely affecting
\nthe ability of the parties to consummate the transactions contemplated hereby
\nand using all reasonable efforts to defend any litigation seeking to enjoin,
\nprevent or delay the consummation of the transactions contemplated hereby or
\nseeking material damages.<\/p>\n
Section 5.7 Employee Matters.
\n —————- <\/p>\n
(a) For purposes of all employee benefit plans (as defined in
\nSection 3(3) of ERISA) and other employment agreements, arrangements and
\npolicies of Parent under<\/p>\n
26<\/p>\n
which an employee’s benefit depends, in whole or in part, on length of service,
\ncredit will be given to current employees of the Company for service with the
\nCompany prior to the Effective Time, provided that such crediting of service
\ndoes not result in duplication of benefits. Parent shall, and shall cause the
\nCompany to, honor in accordance with their terms all employee benefit plans (as
\ndefined in Section 3(3) of ERISA) and other employment, consulting, benefit,
\ncompensation or severance agreements, arrangements and policies of the Company
\n(collectively, the “Company Plans”); provided, however, that Parent or the
\n ——– ——-
\nCompany may amend, modify or terminate any individual Company Plans in
\naccordance with the terms of such Plans and applicable law (including obtaining
\nthe consent of the other parties to and beneficiaries of such Company Plans to
\nthe extent required thereunder); provided, further, that notwithstanding the
\n ——– ——-
\nforegoing provisio, Parent will not cause the Company to (i) reduce any benefits
\nto employees pursuant to such Plans for a period of 12 months following the
\nEffective Time, (ii) reduce any benefit accruals to employees pursuant to any
\nsuch Plans that are defined benefit pension plans, or (iii) reduce the employer
\ncontribution pursuant to any such Plans that are defined contribution pension
\nplans. The Company shall amend its Supplemental Executive Retirement Plans to
\nprovide that, effective as of the Closing, participants who have been (or would
\nhave been) employed by the Company for 10 years or more as of the later of the
\nClosing Date or December 31, 2000, shall be entitled to benefits under such plan
\nupon termination of employment, if terminated within 12 months after the
\nEffective Time, as if such participant was 55 years old at the date of such
\ntermination, subject to the other provisions of such plan.<\/p>\n
(b) Any employee of the Company employed at the time of the
\nClosing at the Company’s corporate offices in Fort Worth, Texas (“Corporate
\nEmployee”) that is terminated by the Company without cause during the 12 months
\nfollowing the Closing Date, shall be paid by the Company, in cash (i) with
\nrespect to Company Employees who are officers of the Company at the time of
\nClosing (“Corporate Officers”), 12 months’ base pay and (ii) with respect to
\nCompany Employees who are not Corporate Officers, the greater of (x) two months’
\nbase pay or (y) one-half of one week’s pay for each year of service. In
\naddition, each Corporate Officer that is an employee of the Company at the time
\nannual bonuses are paid by the Company in the ordinary course of business (or
\nany such Officer that is terminated without cause by the Company) shall receive
\na cash bonus for fiscal year 2000 that is equal to or greater than the cash
\nbonus paid to such Corporate Officer for fiscal year 1999.<\/p>\n
Section 5.8 Indemnification. From and after the Effective Time,
\n —————
\nParent shall, and shall cause the Surviving Corporation to, indemnify, defend
\nand hold harmless each person who is now, or has been at any time prior to the
\ndate of this Agreement or who becomes such prior to the Effective Time, an
\nofficer, director, agent, fiduciary or employee of the Company or any of its
\nsubsidiaries (the “Indemnified Parties”) against (i) any and all losses, claims,
\ndamages, costs, expenses, fines, liabilities or judgments or amounts that are
\npaid in settlement with the approval of the indemnifying party (which approval
\nshall not be unreasonably withheld) of or in connection with any claim, action,
\nsuit, proceeding or investigation based in whole or in part on or arising in
\nwhole or in part out of the fact that such person is or was a director, officer,
\nagent, fiduciary or employee of the Company or any of its subsidiaries whether
\npertaining to any action or omission existing or occurring at or prior to the
\nEffective Time and whether asserted or claimed prior to, or at or after, the
\nEffective Time (“Indemnified Liabilities”), and (ii) all Indemnified Liabilities
\nbased in whole or in part on, or arising in whole or in part out of, or
\npertaining to this Agreement or the transactions contemplated hereby; provided,
\n ——–
\nhowever, that, in
\n——- <\/p>\n
27<\/p>\n
the case of the Purchaser and the Surviving Corporation such indemnification
\nshall only be to the fullest extent a corporation is permitted under the DGCL or
\nthe Texas Act, as applicable, to indemnify its own directors, officers, agents,
\nfiduciaries and employees, and in the case of Parent, such indemnification shall
\nnot be limited by the DGCL but such indemnification shall not be applicable to
\nany claims made against the Indemnified Parties if a judgment or other final
\nadjudication established that (A) their acts or omissions were committed in bad
\nfaith or were the result of active and deliberate dishonesty and were material
\nto the cause of action so deliberated or (B) arising out of, based upon or
\nattributable to the gaining in fact of any financial profit or other advantage
\nto which they were not legally entitled. Parent, Purchaser, and the Surviving
\nCorporation, as the case may be, will pay all expenses of each Indemnified Party
\nin advance of the final disposition of any such action or proceeding to the
\nfullest extent permitted by law upon receipt of any undertaking contemplated by
\nSection 145(e) of the DGCL or Article 2.02-1 of the Texas Act, as applicable.
\nWithout limiting the foregoing, in the event any such claim, action, suit,
\nproceeding or investigation is brought against any Indemnified Party (whether
\narising before or after the Effective Time), (i) the Indemnified Parties may
\nretain counsel satisfactory to them and Parent and Purchaser, (ii) Parent shall,
\nand shall cause the Surviving Corporation to, pay all reasonable fees and
\nexpenses of such counsel for the Indemnified Parties promptly as statements
\ntherefor are received, and (iii) Parent shall, and shall cause the Surviving
\nCorporation to, use all reasonable efforts to assist in the vigorous defense of
\nany such matter, provided that none of Parent, Purchaser or the Surviving
\nCorporation shall be liable for any settlement of any claim effected without its
\nwritten consent, which consent, however, shall not be unreasonably withheld. Any
\nIndemnified Party wishing to claim indemnification under this Section 5.8, upon
\nlearning of any such claim, action, suit, proceeding or investigation, shall
\nnotify Parent, Purchaser or the Surviving Corporation (but the failure so to
\nnotify an indemnifying party shall not relieve it from any liability which it
\nmay have under this Section 5.8 except to the extent such failure materially
\nprejudices such party), and shall deliver to the Purchaser and the Surviving
\nCorporation the undertaking contemplated by Section 145(e) of the DGCL or
\nArticle 2.02-1 of the Texas Act. The Indemnified Parties as a group may retain
\nonly one law firm to represent them with respect to each such matter unless
\nthere is, under applicable standards of professional conduct, a conflict on any
\nsignificant issue between the positions of any two or more Indemnified Parties.<\/p>\n
Section 5.9 Additional Agreements. In case at any time after the
\n ———————
\nEffective Time any further action is necessary or desirable to carry out the
\npurposes of this Agreement or to vest the Surviving Corporation with full title
\nto all properties, assets, rights, approvals, immunities and franchises of any
\nof the parties to the merger, the proper officers and directors of each party to
\nthis Agreement and their respective subsidiaries shall take all such necessary
\naction as may be reasonably requested by, and at the sole expense of, Parent.<\/p>\n
ARTICLE VI<\/p>\n
CONDITIONS<\/p>\n
Section 6.1 Conditions to Each Party’s Obligation To Effect the
\n —————————————————
\nMerger. The respective obligation of each party to effect the Merger shall be
\n——
\nsubject to the satisfaction on or prior to the Closing Date of each of the
\nfollowing conditions:<\/p>\n
28<\/p>\n
(a) Stockholder Approval. This Agreement shall have been
\n ——————–
\nduly approved and adopted by the requisite vote of the holders of Company Common
\nStock, if required by applicable law in order to consummate the Merger;<\/p>\n
(b) Statutes; Consents. No statute, rule, order, decree or
\n ——————
\nregulation shall have been enacted or promulgated by any Governmental Entity or
\nauthority of competent jurisdiction which prohibits the consummation of the
\nMerger and all foreign or domestic governmental consents, orders and approvals
\nrequired for the consummation of the Merger and the transactions contemplated
\nhereby shall have been obtained and shall be in effect at the Effective Time;<\/p>\n
(c) Injunctions. There shall be no order or injunction of
\n ———–
\nany Governmental Entity of competent jurisdiction in effect precluding,
\nrestraining, enjoining or prohibiting consummation of the Merger; provided,
\n ——–
\nhowever, that each of the parties hereto shall have used its reasonable best
\n——-
\nefforts to prevent the entry of any such injunction or other order and to appeal
\nas promptly as possible any injunction or other order that may be entered; and<\/p>\n
(d) Purchase of Shares in Offer. Parent or Purchaser shall
\n —————————
\nhave purchased shares of Company Common Stock pursuant to the Offer, provided
\nthat this condition shall be deemed satisfied with respect to Parent and
\nPurchaser if the Purchaser shall have failed to purchase Shares pursuant to the
\nOffer in breach of its obligations under this Agreement.<\/p>\n
Section 6.2 Conditions to Obligations of Parent and Purchaser to
\n —————————————————-
\nEffect the Merger. The obligations of Parent and Purchaser to effect the
\n—————–
\nMerger are subject to the satisfaction of the further condition (which may be
\nwaived in whole or in part by Parent) that the Company shall have performed in
\nall material respects all material obligations required to be performed by it
\nunder this Agreement on or before the earlier of (i) such time as Parent’s or
\nPurchaser’s designees shall constitute at least a majority of the Company’s
\nBoard of Directors pursuant to Section 1.3 of this Agreement and (ii) the
\nClosing Date.<\/p>\n
ARTICLE VII<\/p>\n
TERMINATION<\/p>\n
Section 7.1 Termination. Anything herein or elsewhere to the
\n ———–
\ncontrary notwithstanding, this Agreement may be terminated and the Merger
\ncontemplated herein may be abandoned at any time prior to the Effective Time,
\nwhether before or after stockholder approval thereof:<\/p>\n
(a) By the mutual consent of the Parent and the Company.<\/p>\n
(b) By either of the Company or Parent:<\/p>\n
(i) if any Governmental Entity shall have issued an
\norder, decree or ruling or taken any other action in each case permanently
\nrestraining, enjoining or otherwise prohibiting the transactions contemplated by
\nthis Agreement and such order, decree, ruling or other action shall have become
\nfinal and non-appealable; provided that the party
\n ——–<\/p>\n
29<\/p>\n
seeking to terminate this Agreement shall have used all reasonable efforts to
\nchallenge such order, decree, ruling or other action;<\/p>\n
(ii) if the Offer shall have expired, terminated or
\nbeen withdrawn pursuant to its terms without any Shares being purchased therein,
\nprovided, however, that the right to terminate this Agreement under this
\n——– ——-
\nSection 7.1(b)(ii) shall not be available to any party whose failure to fulfill
\nany obligation under this Agreement has been the cause of, or has resulted in,
\nthe failure of the Purchaser to purchase Shares in the Offer; or<\/p>\n
(iii) if the Offer shall not have been consummated on or
\nbefore September 30, 2000, (the “Outside Date”), provided that a party may not
\nterminate the Agreement pursuant to this Section 7.1(b)(iii) if its failure to
\nperform any of its obligations under this Agreement results in the failure of
\nthe Offer to be so consummated by such time, provided, however, that the Outside
\n ——– ——-
\nDate shall be extended day-by-day for each day during which any party shall be
\nsubject to a nonfinal order, decree, ruling or action restraining, enjoining or
\notherwise prohibiting the consummation of the Offer, provided further, however,
\n ——– ——-
\nthat the Outside Date shall not be extended past December 31, 2000;<\/p>\n
(c) By the Company:<\/p>\n
(i) if Parent, the Purchaser or any of their affiliates
\nshall have failed to commence the Offer on or prior to seven (7) business days
\nfollowing the date of the initial public announcement of the Offer; provided,
\n ——–
\nthat the Company may not terminate this Agreement pursuant to this Section
\n7.1(c)(i) if the Company is in material breach of this Agreement;<\/p>\n
(ii) if concurrently it enters into a definitive
\nagreement providing for a Superior Proposal entered into in accordance with
\nSection 5.2, provided that prior thereto or simultaneously therewith the
\n ——–
\nCompany has paid the Termination Fee to Parent in accordance with Section 7.3;
\nor<\/p>\n
(iii) if the representations and warranties of Parent or
\nPurchaser set forth in this Agreement that are qualified by materiality shall
\nnot be true and correct in any respect, or if the representations and warranties
\nof Parent and Purchaser set forth in this Agreement that are not so qualified
\nshall not be true and correct in all material respects, in each case as of the
\ndate of this Agreement and as of the Expiration Date as if made on such date, or
\neither Parent or Purchaser shall have breached or failed in any material respect
\nto perform or comply with any material obligation, agreement or covenant
\nrequired by this Agreement to be performed or complied with by it, which
\ninaccuracy or breach cannot be cured or has not been cured within one business
\nday prior to the Expiration Date, except, in the case of the failure of any
\nrepresentation or warranty, for changes specifically permitted by this
\nAgreement, and for those representations and warranties that address matters
\nonly as of a particular date which are true and correct as of such date.<\/p>\n
(d) By Parent:<\/p>\n
(i) if, due to an occurrence that if occurring after
\nthe commencement of the Offer would result in a failure to satisfy any of the
\nconditions set forth in<\/p>\n
30<\/p>\n
Annex A hereto, Parent, Purchaser, or any of their affiliates shall have
\nfailed to commence the Offer on or prior to seven (7) business days following
\nthe date of the initial public announcement of the Offer; provided, that Parent
\n ——–
\nmay not terminate this Agreement pursuant to this Section 7.1(d)(i) if Parent is
\nin material breach of this Agreement;<\/p>\n
(ii) if (i) the Board of Directors of the Company or any
\ncommittee thereof shall have withdrawn or modified, or proposed publicly to
\nwithdraw or modify, in a manner adverse to Parent its approval or recommendation
\nof the Transactions, or failed to reconfirm its recommendation within four (4)
\nbusiness days after a written request to do so, or approved or recommended, or
\nproposed publicly to approve or recommend, any Takeover Proposal, or (ii) the
\nBoard of Directors of the Company or any committee thereof shall have resolved
\nto take any of the foregoing actions; or<\/p>\n
(iii) if the representations and warranties of the
\nCompany set forth in this Agreement that are qualified by materiality shall not
\nbe true and correct in any respect, or if the representations and warranties of
\nthe Company set forth in this Agreement that are not so qualified shall not be
\ntrue and correct in all material respects, in each case as of the date of this
\nAgreement and as of the Expiration Date as if made on such date, or the Company
\nshall have breached or failed in any material respect to perform or comply with
\nany material obligation, agreement or covenant required by this Agreement to be
\nperformed or complied with by it, which inaccuracy or breach cannot be cured or
\nhas not been cured within one business day prior to the Expiration Date, except,
\nin the case of the failure of any representation or warranty, for changes
\nspecifically permitted by this Agreement, and for those representations and
\nwarranties that address matters only as of a particular date which are true and
\ncorrect as of such date.<\/p>\n
Section 7.2 Effect of Termination. In the event of the termination
\n ———————
\nof this Agreement as provided in Section 7.1, written notice thereof shall
\nforthwith be given to the other party or parties specifying the provision hereof
\npursuant to which such termination is made, and this Agreement (other than
\nSections 7.2, 7.3, 8.4, 8.6, 8.7, 8.8 and 8.9 hereof) shall forthwith become
\nnull and void, and there shall be no liability on the part of the Parent or the
\nCompany, except as provided in Section 7.3.<\/p>\n
Section 7.3 Termination Fee; Expenses. Except as provided in this
\n ————————-
\nSection 7.3, all fees and expenses incurred by the parties hereto shall be borne
\nsolely and entirely by the party which has incurred such fees and expenses. In
\nthe event that (A) a Takeover Proposal shall have been made known to the Company
\nor shall have been made directly to its stockholders generally or any person
\nshall have publicly announced an intention (whether or not conditional) to make
\na Takeover Proposal and thereafter this Agreement is terminated by the Company
\neither (I) pursuant to Section 7.1(b)(iii) hereof or, (II) if the Offer has
\nremained open for at least 20 business days and the Minimum Condition has not
\nbeen satisfied (and none of the events described in paragraphs (a), (b), (d) and
\n(e) of Annex A shall have occurred so as to result in a condition to the Offer
\nnot being satisfied), pursuant to Section 7.1(b)(ii) hereof, and in the case of
\neither clause (I) or (II) such Takeover Proposal is consummated within one (1)
\nyear of such termination or (B) this Agreement (i) is terminated by Parent
\npursuant to Section 7.1(d)(ii), or (ii) is terminated by the Company pursuant to
\nSection 7.1(c)(ii), then the Company shall pay to Parent (in the case of a
\ntermination pursuant to Section 7.1(c)(ii), prior to or simultaneously with<\/p>\n
31<\/p>\n
such termination, or in the case of a termination pursuant to Section
\n7.1(d)(ii), not later than one (1) business day after such termination, or in
\nthe case of a termination pursuant to Section 7.1(b)(ii) or 7.1(b)(iii), upon
\nthe consummation of such Takeover Proposal) a termination fee equal to $10
\nmillion in cash and shall reimburse Parent’s out-of-pocket expenses, including
\nattorneys’ fees, related to this Agreement and the transactions contemplated
\nhereby. The fee arrangement contemplated hereby is the sole remedy hereunder and
\nshall be paid pursuant to this Section 7.3 regardless of any alleged breach,
\nother than a willful or intentional breach, by Parent of its obligations
\nhereunder, provided that no payment made by the Company pursuant to this Section
\n7.3 shall operate or be construed as a waiver by the Company of any breach of
\nthis Agreement by Parent or Purchaser or of any rights of the Company in respect
\nthereof.<\/p>\n
ARTICLE VIII<\/p>\n
MISCELLANEOUS<\/p>\n
Section 8.1 Amendment and Modification. Subject to applicable law,
\n ————————–
\nthis Agreement may be amended, modified and supplemented in any and all
\nrespects, whether before or after any vote of the stockholders of the Company
\ncontemplated hereby, by written agreement of the parties hereto at any time
\nprior to the Closing Date with respect to any of the terms contained herein;
\nprovided, however, that no amendment, modification or supplement of this
\n——– ——-
\nAgreement shall be made which adversely effects such holders after the
\nconsummation of the Offer or requires by law or the organizational documents of
\nthe Company the further approval of the stockholders, unless approved by the
\nIndependent Directors.<\/p>\n
Section 8.2 Extension; Waiver. At any time prior to the Effective
\n —————–
\nTime, the parties may (a) extend the time for the performance of any of the
\nobligations or other acts of the other parties, (b) waive any inaccuracies in
\nthe representations and warranties contained in this Agreement or in any
\ndocument delivered pursuant to this Agreement or (c) subject to the proviso of
\nSection 8.1, waive compliance with any of the agreements or conditions contained
\nin this Agreement. Any agreement on the part of a party to any such extension or
\nwaiver shall be valid only if set forth in an instrument in writing signed on
\nbehalf of such party. The failure of any party to this Agreement to assert any
\nof its rights under this Agreement or otherwise shall not constitute a waiver of
\nsuch rights.<\/p>\n
Section 8.3 Nonsurvival of Representations and Warranties. None of
\n ———————————————
\nthe representations and warranties in this Agreement or in any schedule,
\ninstrument or other document delivered pursuant to this Agreement shall survive
\nthe Effective Time.<\/p>\n
Section 8.4 Notices. All notices and other communications hereunder
\n ——-
\nshall be in writing and shall be deemed given if delivered personally,
\ntelecopied (which is confirmed) or sent by an overnight courier service, such as
\nFederal Express, to the parties at the following addresses (or at such other
\naddress for a party as shall be specified by like notice):<\/p>\n
32<\/p>\n
(a) if to Parent or Purchaser, to:<\/p>\n
Berkshire Hathaway Inc.
\n 1440 Kiewit Plaza
\n Omaha, Nebraska 68131
\n Attention: Marc D. Hamburg
\n Telephone No.: 402-346-1400
\n Telecopier No.: 402-346-3375<\/p>\n
with a copy to:<\/p>\n
Munger, Tolles & Olson LLP
\n 355 South Grand Avenue, Suite 3500
\n Los Angeles, California 90071-1560
\n Attention: Robert E. Denham, Esq.
\n Telephone No.: (213) 683-9100
\n Telecopier No.: (213) 687-3702<\/p>\n
(b) if to the Company, to:<\/p>\n
Justin Industries, Inc.
\n 2821 West 7th Street
\n Fort Worth, Texas 76107
\n Attention: Richard Savitz
\n Telephone No.: 817-336-5125
\n Telecopier No.: 817-390-2477<\/p>\n
with a copy to:<\/p>\n
Kelly, Hart & Hallman
\n 201 Main Street, Suite 2500
\n Fort Worth, Texas 76102
\n Attention: Dee J. Kelly and Thomas Briggs
\n Telephone No.: (817) 332-2500
\n Telecopier No.: (817) 878-9280<\/p>\n
Section 8.5 Counterparts. This Agreement may be executed in two or
\n ————
\nmore counterparts, all of which shall be considered one and the same agreement
\nand shall become effective when two or more counterparts have been signed by
\neach of the parties and delivered to the other parties, it being understood that
\nall parties need not sign the same counterpart.<\/p>\n
Section 8.6 Entire Agreement; Third Party Beneficiaries. This
\n ——————————————-
\nAgreement (including the documents and the instruments referred to herein): (a)
\nconstitutes the entire agreement and supersedes all prior agreements and
\nunderstandings, both written and oral, among the parties with respect to the
\nsubject matter hereof, and (b) except as provided in Sections 2.4, 5.7 and 5.8
\nis not intended to confer upon any person other than the parties hereto any
\nrights or remedies hereunder.<\/p>\n
33<\/p>\n
Section 8.7 Severability. If any term, provision, covenant or
\n ————
\nrestriction of this Agreement is held by a court of competent jurisdiction or
\nother authority to be invalid, void, unenforceable or against its regulatory
\npolicy, the remainder of the terms, provisions, covenants and restrictions of
\nthis Agreement shall remain in full force and effect and shall in no way be
\naffected, impaired or invalidated.<\/p>\n
Section 8.8 Governing Law. This Agreement shall be governed and
\n ————-
\nconstrued in accordance with the laws of the State of Texas without giving
\neffect to the principles of conflicts of law thereof or of any other
\njurisdiction.<\/p>\n
Section 8.9 Assignment. Neither this Agreement nor any of the
\n ———-
\nrights, interests or obligations hereunder shall be assigned by any of the
\nparties hereto (whether by operation of law or otherwise) without the prior
\nwritten consent of the other parties, except that the Purchaser may assign, in
\nits sole discretion, any or all of its rights, interests and obligations
\nhereunder to Parent or to any direct or indirect wholly owned subsidiary of
\nParent. Subject to the preceding sentence, this Agreement shall be binding upon,
\ninure to the benefit of and be enforceable by the parties and their respective
\nsuccessors and assigns.<\/p>\n
Section 8.10 Headings. The descriptive headings used herein are
\n ——–
\ninserted for convenience of reference only and are not intended to be part of or
\nto affect the meaning or interpretation of this Agreement. “Include,”
\n“includes,” and “including” shall be deemed to be followed by “without
\nlimitation” whether or not they are in fact followed by such words or words of
\nlike import.<\/p>\n
Section 8.11 Enforcement. The parties agree that irreparable
\n ———–
\ndamage would occur in the event that any of the provisions of this Agreement
\nwere not performed in accordance with their specific terms or were otherwise
\nbreached. It is accordingly agreed that the parties shall be entitled to an
\ninjunction or injunctions to prevent breaches of this Agreement and to enforce
\nspecifically the terms and provisions of this Agreement in any court of the
\nState of Texas or of the United States located in the State of Texas in the
\nevent any dispute arises out of this Agreement or any of the transactions
\ncontemplated by this Agreement, and each party will not attempt to deny or
\ndefeat personal jurisdiction or venue in any such court by motion or other
\nrequest for leave from any such court.<\/p>\n
34<\/p>\n
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
\nAgreement to be signed by their respective officers thereunto duly authorized as
\nof the date first written above.<\/p>\n
Berkshire Hathaway Inc.<\/p>\n
By:__________________________________________
\n Name:
\n Title:<\/p>\n
J Acquisition Corp.<\/p>\n
By:__________________________________________
\n Name:
\n Title:<\/p>\n
Justin Industries, Inc.<\/p>\n
By:__________________________________________
\n Name:
\n Title:<\/p>\n
35<\/p>\n
ANNEX A
\n ——-<\/p>\n
CONDITIONS TO THE OFFER
\n ———————–<\/p>\n
Notwithstanding any other provision of the Offer (subject to the
\nprovisions of the Agreement), Purchaser shall not be required to accept for
\npayment or, subject to any applicable rules and regulations of the SEC,
\nincluding Rule 14e-l(c) under the Exchange Act (relating to Purchaser’s
\nobligation to pay for or return tendered Shares promptly after termination or
\nwithdrawal of the Offer), pay for, and may delay the acceptance for payment of
\nor, subject to the restriction referred to above, the payment for, any tendered
\nShares, and may terminate the Offer and not accept for payment any tendered
\nshares if (i) there shall not have been validly tendered and not withdrawn prior
\nto the expiration of the Offer such number of Shares (and associated Rights)
\nwhich would constitute at least sixty-seven percent (67%) of the Shares
\noutstanding on a fully diluted basis on the date of purchase (on a “fully
\ndiluted basis” meaning the number of Shares outstanding, together with the
\nShares which the Company may be required to issue pursuant to options or
\nobligations outstanding at that date and which do not terminate upon
\nconsummation of the Offer under employee stock or similar benefit plans or
\notherwise, whether or not vested or then exercisable), when aggregated with any
\nShares owned by Parent, Purchaser or an affiliate of Parent or Purchaser (the
\n“Minimum Condition”), (ii) any applicable waiting period under the HSR Act has
\nnot expired or terminated prior to the expiration of the Offer, or (iii) at any
\ntime on or after the date of the Agreement, and before the time of acceptance of
\nShares for payment pursuant to the Offer, any of the following events shall
\noccur and be continuing:<\/p>\n
(a) there shall be any statute, rule, regulation, judgment,
\norder or injunction promulgated, entered, enforced, enacted, issued or
\napplicable to the Offer or the Merger by any domestic or foreign federal or
\nstate governmental regulatory or administrative agency or authority or court or
\nlegislative body or commission which (1) prohibits, or imposes any material
\nlimitations on, Parent’s, Purchaser’s, or the Company’s ownership or operation
\nof all or a material portion of the Company’s and its subsidiaries’ businesses
\nand assets taken as a whole, (2) prohibits, or makes illegal the acceptance for
\npayment, payment for or purchase of Shares or the consummation of the Offer or
\nthe Merger, (3) renders Purchaser unable to accept for payment, pay for or
\npurchase some or all of the Shares, or (4) imposes material limitations on the
\nability of Purchaser or Parent effectively to exercise full rights of ownership
\nof the Shares, including, without limitation, the right to vote the Shares
\npurchased by it on all matters properly presented to the Company’s stockholders,
\nprovided that Parent shall have used all reasonable efforts to cause any such
\n——–
\njudgment, order or injunction to be vacated or lifted;<\/p>\n
(b) there shall be any action or proceeding instituted and
\npending by any domestic or foreign federal or state governmental regulatory or
\nadministrative agency or authority which (1) seeks to prohibit, or impose any
\nmaterial limitation on, Parent’s, Purchaser’s, or the Company’s ownership or
\noperation of all or a material portion of the Company’s and its subsidiaries’
\nbusinesses and assets taken as a whole, (2) seeks to prohibit or make illegal
\nthe acceptance for payment, payment for or purchase of Shares or the
\nconsummation of the Offer or the Merger, (3) is reasonably likely to result in a
\nmaterial delay in or seeks to restrict the ability<\/p>\n
of Purchaser, or render Purchaser unable to accept for payment, pay for or
\npurchase some or all of the Shares, or (4) seeks to impose material limitations
\non the ability of Purchaser or Parent effectively to exercise full rights of
\nownership of the Shares, including, without limitation, the right to vote the
\nShares purchased by it on all matters properly presented to the Company’s
\nstockholders; provided that Parent shall have used all reasonable efforts to
\n ——–
\ncause any such action or proceeding to be dismissed;<\/p>\n
(c) the representations and warranties of the Company set
\nforth in the Agreement that are qualified by materiality shall not be true and
\ncorrect in any respect, or the representations and warranties of the Company set
\nforth in this Agreement that are not so qualified shall not be true and correct
\nin any material respect, in either case, as of the date of consummation of the
\nOffer as though made on or as of such date, or the Company shall have breached
\nor failed in any material respect to perform or comply with any material
\nobligation, agreement or covenant required by the Agreement to be performed or
\ncomplied with by it (including without limitation if the Company shall have
\nentered into any definitive agreement or any agreement in principle with any
\nperson with respect to a Takeover Proposal or similar business combination with
\nthe Company in violation of Section 5.2), except, in the case of the failure of
\nany representation or warranty, for changes specifically permitted by the
\nAgreement, and for those representations and warranties that address matters
\nonly as of a particular date which are true and correct as of such date;<\/p>\n
(d) (1) any general suspension of trading in securities on
\nany national securities exchange or in the over-the-counter market, (2) the
\ndeclaration of a banking moratorium or any suspension of payments in respect of
\nbanks by a United States Governmental Entity, or (3) any mandatory limitation by
\na United States Governmental Entity that materially and adversely effects the
\nextension of credit by banks or other financial institutions; or<\/p>\n
(e) the Agreement shall have been terminated in accordance
\nwith its terms;<\/p>\n
which in the reasonable judgment of Parent or Purchaser, in any such case, and
\nregardless of the circumstances giving rise to such condition, makes it
\ninadvisable to proceed with the Offer or with such acceptance for payment or
\npayments.<\/p>\n
The foregoing conditions are for the sole benefit of Purchaser and
\nParent and may be asserted by either of them or may be waived by Parent or
\nPurchaser, in whole or in part at any time and from time to time in the sole
\ndiscretion of Parent or Purchaser.<\/p>\n
-2-<\/p>\n
EXHIBIT A<\/p>\n
STOCKHOLDERS AGREEMENT<\/p>\n
This STOCKHOLDERS AGREEMENT (this “Agreement”), dated as of June 19,
\n2000, is made and entered into among Berkshire Hathaway Inc., a Delaware
\ncorporation (“Parent”), J Acquisition Corp., a Texas corporation and wholly
\nowned subsidiary of Parent (“Purchaser”), and each party listed under the
\nheading “STOCKHOLDER” on the signature page hereof (each a “Stockholder” and
\ncollectively, the “Stockholders”);<\/p>\n
W I T N E S S E T H:<\/p>\n
WHEREAS, as of the date hereof, each Stockholder owns beneficially and
\nof record the number of shares of common stock, par value $2.50 per share
\n(“Company Common Stock”), of Justin Industries, Inc., a Texas corporation (the
\n“Company”), and the number of shares of Series Two Convertible Voting Preferred
\nStock, par value $2.50 per share of the Company (“Company Preferred Stock” and
\ntogether with the Company Common Stock, the “Company Stock”), set forth opposite
\nthe Stockholder’s name on Exhibit A hereto (the total number of shares of
\nCompany Stock owned by the Stockholder, and any other Company Stock or any stock
\noption that the Stockholder acquires, whether by means of purchase, dividend,
\ndistribution, or otherwise, prior to the termination of this Agreement, being
\ncollectively referred to as the “Shares”);<\/p>\n
WHEREAS, concurrently with the execution and delivery of this
\nAgreement, the Company, Parent, and Purchaser are entering into an Agreement and
\nPlan of Merger (the “Merger Agreement,” which term shall not include any
\namendment to such Agreement that decreases the Offer Price or changes the form
\nof consideration payable in the Offer, unless Stockholder consents to the
\ninclusion of such amendment in such term), of even date herewith, which (upon
\nthe terms and subject to the conditions set forth therein) provides for, among
\nother things, a tender offer (the “Offer”) by Purchaser for the Company Common
\nStock and the subsequent merger of Purchaser with and into the Company (the
\n“Merger”); and<\/p>\n
WHEREAS, as a condition to their willingness to enter into the Merger
\nAgreement, Parent and Purchaser have requested each Stockholder to agree, and in
\norder to induce Parent and Purchaser to enter into the Merger Agreement each
\nStockholder has agreed, to enter into this Agreement.<\/p>\n
NOW, THEREFORE, in consideration of the premises and the
\nrepresentations, warranties, covenants, and agreements hereinafter set forth,
\nthe parties hereto hereby agree as follows:<\/p>\n
-1-<\/p>\n
ARTICLE I<\/p>\n
STOCKHOLDERS’ REPRESENTATIONS AND WARRANTIES<\/p>\n
Each Stockholder hereby jointly and severally represents and warrants
\nto Parent and Purchaser as follows:<\/p>\n
Section 1.1 Due Organization and Authorization. Stockholder, if it is
\na trust, is duly organized and validly existing under the laws of the
\njurisdiction in which it is formed. Stockholder possesses the requisite power
\nand authority to execute, deliver, and perform this Agreement, to appoint
\nPurchaser and Parent (or any nominee thereof) as its Proxy (as defined below),
\nand to consummate the transactions contemplated hereby. The execution, delivery,
\nand performance of this Agreement, the appointment of Purchaser and Parent (or
\nany nominee thereof) as Stockholder’s Proxy, and the consummation of the
\ntransactions contemplated hereby have been duly authorized by all requisite
\naction of Stockholder. This Agreement has been duly executed and delivered by or
\non behalf of Stockholder and constitutes a legal, valid, and binding obligation
\nof Stockholder, enforceable against Stockholder in accordance with its terms.
\nThere is no beneficial owner of any of the Shares or other beneficiary or holder
\nof any other interest in any of the Shares whose consent is required for the
\nexecution and delivery of this Agreement or for the consummation by Stockholder
\nof the transactions contemplated hereby.<\/p>\n
Section 1.2 No Conflicts; Required Filings and Consents. (a) The
\nexecution and delivery of this Agreement by Stockholder do not, and the
\nperformance of this Agreement by Stockholder will not, (i) conflict with or
\nviolate the trust instrument of Stockholder if it is a trust, (ii) conflict with
\nor violate any law applicable to Stockholder or by which Stockholder or any of
\nStockholder’s assets is bound or affected, or (iii) result in any breach of or
\nconstitute a default (or an event that with notice or lapse of time or both
\nwould become a default) under, or give to others any rights of termination,
\nacceleration, or cancellation of, or result in the creation of a lien or
\nencumbrance on any assets of Stockholder, including, without limitation, the
\nShares, pursuant to, any note, bond, mortgage, indenture, contract, agreement,
\nlease, license, permit, franchise, or other instrument or obligation to which
\nStockholder is a party or by which Stockholder or any of Stockholder’s assets is
\nbound or affected.<\/p>\n
(b) The execution and delivery of this Agreement by Stockholder does
\nnot, and the performance of this Agreement by Stockholder will not, require any
\nconsent, approval, authorization or permit of, or filing with or notification
\nto, any governmental or regulatory authority, domestic or foreign, other than
\n(i) filings under the HSR Act and any similar foreign requirements, and (ii) any
\nnecessary filing under the Securities Exchange Act of 1934, as amended.<\/p>\n
Section 1.3 Title to Shares. Stockholder is the sole record and
\nbeneficial owner of the shares of Company Stock set forth opposite Stockholder’s
\nname on Exhibit A hereto, free and clear of any pledge, lien, security interest,
\nmortgage, claim, proxy, voting restriction or other voting trust, agreement,
\nunderstanding, or arrangement of any kind, right of first refusal or other
\nlimitation on disposition, adverse claim of ownership, or other encumbrance of
\nany kind, other than restrictions imposed by securities laws or pursuant to this
\nAgreement or<\/p>\n
-2-<\/p>\n
the Merger Agreement. As of the date hereof, Stockholder does not own
\nbeneficially or of record any other Shares. The shares of Company Preferred
\nStock shown on Exhibit A constitute all of the issued and outstanding shares of
\nCompany Preferred Stock.<\/p>\n
Section 1.4 Information for Offer Documents and Proxy Statement. None
\nof the information relating to Stockholder and its affiliates provided by or on
\nbehalf of Stockholder or its affiliates specifically for inclusion in the
\nSchedule TO, Schedule 14D-9, Offer Documents, or Proxy Statement will, at the
\nrespective times the Schedule TO, Schedule 14D-9, Offer Documents, and Proxy
\nStatement are filed with the SEC or are first published, sent or given to
\nstockholders of the Company, contain any untrue statement of a material fact or
\nomit to state any material fact required to be stated therein or necessary in
\norder to make the statements therein, in light of the circumstances under which
\nthey were made, not misleading.<\/p>\n
ARTICLE II<\/p>\n
STOCKHOLDERS’ COVENANTS<\/p>\n
Each Stockholder hereby jointly and severally covenants to Parent and
\nPurchaser as follows:<\/p>\n
Section 2.1 Voting of Shares. Stockholder hereby agrees that from
\nthe date hereof until the termination of the Agreement pursuant to Section 4.2
\n(the “Term”), at any meeting of the stockholders of the Company however called
\nand in any action by written consent of the stockholders of the Company,
\nStockholder shall vote its Shares (i) in favor of the Merger and the Merger
\nAgreement, (ii) against any Takeover Proposal (as defined in the Merger
\nAgreement) and against any proposal for action or agreement that would result in
\na breach of any covenant, representation or warranty or any other obligation or
\nagreement of the Company under the Merger Agreement or which is reasonably
\nlikely to result in any of the Company’s obligations under the Merger Agreement
\nnot being fulfilled, any change in the directors of the Company (except as
\ncontemplated by the Merger Agreement), any change in the present capitalization
\nof the Company or any amendment to the Company’s corporate structure or
\nbusiness, or any other action which could reasonably be expected to impede,
\ninterfere with, delay, postpone or materially adversely affect the transactions
\ncontemplated by this Agreement or the Merger Agreement or the likelihood of such
\ntransactions being consummated and (iii) in favor of any other matter necessary
\nfor consummation of the transactions contemplated by the Merger Agreement which
\nis considered at any such meeting of shareholders or in such consent, and in
\nconnection therewith to execute any documents which are necessary or appropriate
\nin order to effectuate the foregoing, including the ability for Purchaser or its
\nnominee(s) to vote the Shares directly.<\/p>\n
Section 2.2 Proxy. Stockholder hereby revokes all prior proxies or
\npowers of attorney with respect to any of its Shares. During the Term,
\nStockholder hereby constitutes and appoints Parent and Purchaser, or any nominee
\ndesignated by Parent and Purchaser, with full power of substitution and
\nresubstitution at any time during the Term, as its true and lawful attorney and
\nproxy (“Proxy”), for and in its name, place, and stead, to demand that the
\nSecretary of the Company call a special meeting of the stockholders of the
\nCompany for the purpose of considering any matter referred to in Section 2.1 and
\nto vote each Share held by Stockholder as<\/p>\n
-3-<\/p>\n
its Proxy in respect of any such matter, at every annual, special, adjourned, or
\npostponed meeting of the stockholders of the Company, including the right to
\nsign its name (as stockholder) to any consent, certificate, or other document
\nrelating to the Company that the law of the State of Texas might permit or
\nrequire. THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE AND COUPLED
\nWITH AN INTEREST THROUGHOUT THE TERM. Stockholder will take such further action
\nand execute such other documents as may be necessary to effectuate the intent of
\nthis Section 2.2.<\/p>\n
Section 2.3 Conversion. Provided that all conditions to the Offer
\nhave been satisfied or waived by Parent and Purchaser, Stockholder hereby agrees
\nto take such actions as are required to convert all shares of Company Preferred
\nStock owned by Stockholder into Company Common Stock immediately prior to the
\nExpiration Date of the Offer.<\/p>\n
Section 2.4 Tender. Stockholder hereby agrees to tender in the
\nOffer, prior to the Expiration Date, all Shares of Company Common Stock
\n(including all such Shares acquired upon conversion of Company Preferred Stock)
\nowned beneficially and of record by it. Stockholder hereby acknowledges and
\nagrees that Parent’s and Purchaser’s obligation to accept for payment and pay
\nfor such Shares in the Offer is subject to the terms and conditions set forth in
\nAnnex A to the Merger Agreement. Without the consent of Stockholder, Purchaser
\nwill not purchase any such Shares tendered by Stockholder unless the Minimum
\nCondition has been satisfied and not waived by Purchaser and Parent.<\/p>\n
Section 2.5 Restrictions on Transfer, Proxies and Non-Interference.
\nStockholder hereby agrees, while this Agreement is in effect, and except as
\ncontemplated hereby, not to (i) sell, transfer, pledge, encumber, assign or
\notherwise dispose of, or enter into any contract, option or other arrangement or
\nunderstanding with respect to the sale, transfer, pledge, encumbrance,
\nassignment or other disposition of, any of the Shares, (ii) grant any proxies,
\ndeposit any Shares into a voting trust or enter into a voting agreement with
\nrespect to any Shares, or (iii) take any action that would make any
\nrepresentation or warranty of Stockholder contained herein untrue or incorrect
\nin any material respect or have the effect of preventing or disabling
\nStockholder from performing Stockholder’s obligations under this Agreement.<\/p>\n
Section 2.6 Disclosure. Stockholder hereby authorizes Parent and
\nPurchaser to publish and disclose in the Offer Documents and, if approval of the
\nCompany’s stockholders is required under applicable law, the Proxy Statement
\n(including all documents and schedules filed with the SEC), its identity, its
\nownership of Company Securities, and the nature of its commitments,
\narrangements, and understandings under this Agreement.<\/p>\n
Section 2.7 No Solicitation. Stockholder covenants and agrees that,
\nduring the Term, it shall not, directly or indirectly, solicit, initiate,
\nknowingly encourage, or take any other action designed to facilitate any
\ninquiries or the making of any proposal from any person (other than from Parent
\nor Purchaser) relating to (i) any acquisition of any Shares or (ii) any
\ntransaction that constitutes a Takeover Proposal. Stockholder further covenants
\nand agrees that, during the Term, it shall not participate in any discussions or
\nnegotiations (except with Parent or Purchaser) regarding, or furnish to any
\nperson (other than Parent or Purchaser) any information with respect to, or
\notherwise cooperate in any way with, or assist or participate in or facilitate
\nor encourage, any effort or attempt by any person (other than Parent and
\nPurchaser) to make, any transaction<\/p>\n
that may constitute a Takeover Proposal. Stockholder immediately shall cease and
\ncause to be terminated all existing discussions or negotiations of Stockholder
\nand its agents, or other representatives with any person (other than Parent and
\nPurchaser) with respect to any of the foregoing. Stockholder shall notify Parent
\nand Purchaser promptly of any such proposal or offer, or any inquiry or contact
\nwith any person with respect thereto, of which it becomes aware and shall, in
\nany such notice to Parent and Purchaser, indicate in reasonable detail the
\nidentity of the person making such proposal, offer, inquiry, or contact and the
\nmaterial terms and conditions of such proposal, offer, inquiry, or contact.
\nNotwithstanding any provision of this Section to the contrary, Stockholder may,
\nand if any agent, or representative of Stockholder is a member of the Board of
\nDirectors of the Company, such member of the Board of Directors of the Company
\nmay, in his or her capacity as such director, take such actions, if any, as are
\npermitted by Section 5.2 of the Merger Agreement.<\/p>\n
ARTICLE III<\/p>\n
COMPANY SECURITIES OPTION<\/p>\n
Section 3.1 Grant of Option. In order to induce Parent and Purchaser
\nto enter into the Merger Agreement, each Stockholder hereby grants to Parent and
\nPurchaser an irrevocable option (the “Company Securities Option”) to purchase
\nthe Stockholder’s Shares at a price per Share (the “Offer Price”) equal to
\n$22.00 in cash or any higher price paid or to be paid by Parent or Purchaser
\npursuant to the Offer or the Merger or prior to the termination of this
\nAgreement pursuant to Section 4.2 below, but excluding any price paid to any
\nshareholder who exercises dissenters’ rights in connection with the Merger. The
\nCompany Securities Option shall be exercisable pursuant to the terms of Section
\n3.2 below.<\/p>\n
Section 3.2 Exercise of Company Securities Option. The Company
\nSecurities Option (i) shall become exercisable, in whole but not in part, for
\nall Shares subject thereto (less any such Shares which Purchaser has accepted
\nfor payment or paid for in the Offer) at the close of business upon the
\nExpiration Date (or, if for any reason later, immediately after the expiration
\nof the period, including any extensions thereof, during which shares of Company
\nCommon Stock tendered pursuant to the Offer may by the terms of the Offer be
\naccepted or rejected) or, if later, the date on which (x) all waiting periods
\nunder the HSR Act or other applicable law shall have expired or been waived and
\n(y) there shall not be in effect any preliminary or final injunction or other
\norder issued by any court or governmental, administrative, or regulatory agency
\nor authority prohibiting the exercise of the Company Securities Option pursuant
\nto this Agreement, if, but only if, (I) the number of shares of Company Common
\nStock tendered in the Offer, when added to the number of Shares not tendered, if
\nany, that are subject to the Company Securities Options, will satisfy the
\nMinimum Condition, (II) if the number of shares of Company Common Stock tendered
\nin the Offer is not sufficient to cause the Minimum Condition to be satisfied,
\nParent and Purchaser shall have waived the Minimum Condition, and (III)
\nPurchaser has accepted for payment all shares of Company Common Stock tendered
\nand not withdrawn in the Offer, and (ii) shall remain exercisable for a period
\nof fifteen (15) days after the first such date on which the Company Securities
\nOption becomes exercisable pursuant to clause (i) of this sentence. If the
\nCompany Securities Option does not become exercisable under this Section 3.2 due
\nto (a) the termination or withdrawal of the Offer prior to the Expiration Date
\n(or the later date specified in the second<\/p>\n
-5-<\/p>\n
parenthetical of this Section 3.2), or (b) the failure of Purchaser to accept
\nfor payment all shares of Company Common Stock tendered and not withdrawn in the
\nOffer, it shall be deemed to have expired. In the event that Parent or Purchaser
\nwishes to exercise the Company Securities Option, Parent or Purchaser, prior to
\nthe expiration thereof, shall send a written notice to Stockholder identifying
\nthe place for the closing of such purchase at least two (2) business days prior
\nto such closing.<\/p>\n
Section 3.3 Subsequent Sale. If, prior to the earlier of (i) the
\nEffective Time and (ii) the date which is eighteen (18) months after the
\nexercise of the Company Securities Option by Parent or Purchaser, Parent or
\nPurchaser sells any or all of the Shares purchased from Stockholder to an
\nunaffiliated third party (a “Subsequent Sale”) at a per share price in excess of
\nthe Offer Price (the “Subsequent Sale Price”), then Parent or Purchaser will pay
\nto Stockholder, within five (5) days of receipt of payment by Parent or
\nPurchaser for such Shares, an amount equal to the excess of the Subsequent Sale
\nPrice over the Offer Price multiplied by the number of shares sold in the
\nSubsequent Sale.<\/p>\n
ARTICLE IV<\/p>\n
MISCELLANEOUS<\/p>\n
Section 4.1 Definitions. Terms used but not otherwise defined in
\nthis Agreement, have the meanings assigned to such terms in the Merger
\nAgreement.<\/p>\n
Section 4.2 Termination. This Agreement shall terminate and be of no
\nfurther force and effect (i) by the written mutual consent of the parties hereto
\nor (ii) automatically and without any required action of the parties hereto upon
\nthe earlier to occur of (A) the Effective Time or (B) the closing of the
\nexercise of the Company Securities Option or the expiration of the Company
\nSecurities Option, whichever occurs earlier. The termination of this Agreement
\nshall not relieve any party hereto from any liability for any breach of this
\nAgreement prior to termination.<\/p>\n
Section 4.3 Non-Survival. The representations and warrants made
\nherein shall terminate upon Stockholder’s sale of its Shares to the Purchaser in
\nthe Offer or pursuant to Section 3.2.<\/p>\n
Section 4.4 Notices. All notices and other communications hereunder
\nshall be in writing and shall be deemed to have been duly given (i) upon hand
\ndelivery, (ii) upon confirmation of receipt of facsimile transmission, (iii)
\nupon confirmed delivery by a standard overnight courier, or (iv) after five (5)
\nbusiness days if sent by registered or certified mail, postage prepaid, return
\nreceipt requested, to the following address or to such other address that a
\nparty hereto might later specify by like notice:<\/p>\n
(a) If to Parent or Purchaser, to:<\/p>\n
Berkshire Hathaway Inc.
\n 1440 Kiewit Plaza
\n Omaha, Nebraska 68131
\n Attention: Marc D. Hamburg<\/p>\n
-6-<\/p>\n
Telecopy: 402-346-3375<\/p>\n
with copies to:<\/p>\n
Munger, Tolles & Olson LLP
\n 355 South Grand Avenue, 35th Floor
\n Los Angeles, California 90071-1560
\n Attention: Robert E. Denham
\n Telecopy: (213) 687-3702<\/p>\n
(b) If to Stockholders, to:<\/p>\n
Mr. John S. Justin, Jr.
\n c\/o Justin Industries, Inc.
\n 2821 West 7th Street
\n Fort Worth, Texas 76107
\n Telecopy: 817-390-2477<\/p>\n
with copies to:<\/p>\n
Kelly Hart & Hallman
\n 201 Main Street, Suite 2500
\n Fort Worth, Texas 76102
\n Attention: Dee J. Kelly and F. Richard Bernasek
\n Telecopy: (817) 878-9280<\/p>\n
Section 4.5 Severability. In the event that any provision in this
\nAgreement is held invalid, illegal, or unenforceable in a jurisdiction, such
\nprovision shall be modified or deleted as to the jurisdiction involved but only
\nto the extent necessary to render the same valid, legal, and enforceable. The
\nvalidity, legality, and enforceability of the remaining provisions hereof shall
\nnot in any way be affected or impaired thereby nor shall the validity, legality,
\nor enforceability of such provision be affected thereby in any other
\njurisdiction.<\/p>\n
Section 4.6 Entire Agreement. This Agreement and the Merger
\nAgreement, as it may be amended from time to time, constitute the entire
\nagreement among the parties with respect to the subject matter hereof and
\nsupersede all prior agreements and understandings, both written and oral, among
\nthe parties, or any of them, with respect thereto.<\/p>\n
Section 4.7 Assignment. No party may assign or delegate this
\nAgreement or any right, interest, or obligation hereunder, provided that Parent
\nor Purchaser, in its sole discretion, may assign or delegate its rights and
\nobligations hereunder to any direct or indirect wholly-owned subsidiary of
\nParent; provided that any such assignment or delegation shall not relieve Parent
\nor Purchaser from liability hereunder.<\/p>\n
Section 4.8 No Third-Party Beneficiaries. This Agreement shall be
\nbinding upon, inure solely to the benefit of, and be enforceable by only the
\nparties hereto, their respective successors, and permitted assigns, and nothing
\nin this Agreement, express or implied, is intended<\/p>\n
-7-<\/p>\n
to or shall confer upon any person, other than the parties hereto, their
\nrespective successors, and permitted assigns, any rights, remedies, obligations,
\nor liabilities of any nature whatsoever.<\/p>\n
Section 4.9 Waiver of Appraisal Rights. Stockholder hereby waives
\nany rights of appraisal or rights to dissent from the Merger.<\/p>\n
Section 4.10 Further Assurance. Each party hereto shall execute and
\ndeliver such additional documents and take all such further action as may be
\nnecessary or desirable to consummate and make effective, in the most expeditious
\nmanner practicable, the transactions contemplated by this Agreement.<\/p>\n
Section 4.11 Certain Events. Stockholder agrees that this Agreement
\nand the obligations hereunder shall attach to Stockholder’s Shares and shall be
\nbinding upon any person or entity to which legal or beneficial ownership of such
\nShares shall pass, whether by operation of law or otherwise. Notwithstanding any
\ntransfer of Shares, the transferor shall remain liable for the performance of
\nall obligations under this Agreement.<\/p>\n
Section 4.12 No Waiver. The failure of any party hereto to exercise
\nany right, power, or remedy provided under this Agreement or otherwise available
\nat law or in equity, the failure of any party hereto to insist upon compliance
\nby any other party hereto with its obligations hereunder, or the existence of
\nany custom or practice of the parties at variance with the terms hereof shall
\nnot constitute a waiver by such party of its right to exercise any such or other
\nright, power, or remedy or to demand such compliance.<\/p>\n
Section 4.13 Specific Performance. The parties hereto acknowledge
\nthat irreparable damage would occur in the event that any of the provisions of
\nthis Agreement were not performed in accordance with their specific terms or
\notherwise breached. Accordingly, the parties agree that an aggrieved party shall
\nbe entitled to injunctive relief to prevent breaches of this Agreement and to
\nenforce specifically the terms and provisions hereof in any court having
\njurisdiction, this being in addition to any other right or remedy to which such
\nparty may be entitled under this Agreement, at law, or in equity.<\/p>\n
Section 4.14 Governing Law. This Agreement shall be governed by, and
\nconstrued in accordance with, the laws of the State of Texas, without effect to
\nprovisions thereof relating to conflicts of law.<\/p>\n
Section 4.15 Headings. The descriptive headings in this Agreement
\nwere included for convenience of reference only and shall not affect in any way
\nthe meaning or interpretation of this Agreement.<\/p>\n
Section 4.16 Counterparts. This Agreement may be executed in one or
\nmore counterparts, each of which shall be deemed an original, but all of which
\ntogether shall constitute one and the same instrument.<\/p>\n
-8-<\/p>\n
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
\nto be executed in a manner sufficient to bind them as of the date first written
\nabove.<\/p>\n
Berkshire Hathaway Inc.<\/p>\n
By: ______________________________________
\n Its: ______________________________________<\/p>\n
J Acquisition Corp.<\/p>\n
By: ______________________________________
\n Its: ______________________________________<\/p>\n
Stockholders<\/p>\n
By: ______________________________________
\n John S. Justin, Jr.<\/p>\n
John and Jane Justin Charitable Remainder Unitrust under
\n Agreement dated June 20, 1998<\/p>\n
By: ______________________________________
\n John S. Justin, Jr., Trustee<\/p>\n
John S. Justin Jr. Charitable Remainder Trust under
\n Agreement dated October 12, 1992<\/p>\n
By: ______________________________________
\n John S. Justin, Jr., Trustee<\/p>\n
By: ______________________________________
\n James T. Dickenson, Trustee<\/p>\n
46<\/p>\n
\n\nExhibit A
\nName No. of Shares
\n—- ————-
\n Company Common Stock Company Preferred Stock
\n ——————– ————————<\/p>\n
\nJohn S. Justin, Jr. 49,812 100<\/p>\nJohn and Jane Justin Charitable 4,655,067 -0-
\n Remainder Unitrust under Agreement
\n dated June 20, 1998 <\/p>\n
John S. Justin Jr. Charitable 399,901 -0-
\n Remainder Trust under Agreement
\n dated October 12, 1992
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
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